In today’s briefing:
- Makino Milling Machine (6135 JP): Nidec Launches Its Offer
- Nikkei 225 (NKY INDEX) Drops Amid US Tariffs: Implied Volatility Hits Extreme Levels
- Now Is the Time to Turn the Slowdown in Profit Growth into an Opportunity
- Chart of the Day: Implied Volatility Soars Globally, US and Bitcoin Hit Hardest
- D. Western Therapeutics Institute (DWTI) (4576 JP) – Q4 Follow-Up
Makino Milling Machine (6135 JP): Nidec Launches Its Offer
- Nidec Corp (6594 JP) has launched its offer for Makino Milling Machine Co (6135 JP) at an unchanged JPY11,000. The offer is open from 4 April to 21 May.
- The offer was launched despite securing all regulatory approvals and the Board’s postponement request. The launch could also be an attempt to thwart a competing proposal.
- Despite the launch, Nidec’s offer at current terms has a low chance of success, necessitating revised terms. There remains a medium-to-high probability of a competing proposal.
Nikkei 225 (NKY INDEX) Drops Amid US Tariffs: Implied Volatility Hits Extreme Levels
- Market Reaction: The announcement of US reciprocal tariffs led to significantly lower market open throughout Asia-Pacific. In the US, S&P 500 futures dropped -3.5%, with the VIX spiking to 23.45.
- Impact on Japan: Japan faces a 24% tariff, with specific sectors like automobiles hit with 25%. This led to a 4.5% drop in the Nikkei 225, stabilizing at 34,600 (-3.2%).
- Volatility Increase: The Nikkei 225 VIX index jumped from previous levels in the low 20’s to rise above 38 before retreating to 32.8, indicating the 99th percentile of implied volatility.
Now Is the Time to Turn the Slowdown in Profit Growth into an Opportunity
- The profit outlook for many Japanese companies may not be good enough for overseas investors, who are selecting the best investments from among stocks around the world.
- In FY2025, both sales and recurring profit are expected to slow in the manufacturing sector. This casts a shadow over TSE stock prices, which are dominated by manufacturing companies.
- Companies whose corporate performance are at a standstill has good opportunity to show investors how it will use the proceeds from the sale of cross-held shares to expand corporate value.
Chart of the Day: Implied Volatility Soars Globally, US and Bitcoin Hit Hardest
- Asia-Pac Performance: The Indian market bucketed the down trend with the Nifty 50 declining only 0.35% with stable implied volatility. The Nikkei 225, on the other hand,dropped 2.8%.
- US and European Decline: The US market saw the largest decline, with implied volatility rising by 8%. European indices showed mixed results, with the EuroStoxx 50 reacting strongly.
- Gold vs. Bitcoin: Gold (GLD US ETF) proved to be a better store of value, while Bitcoin joined the US indices in higher volatility.
D. Western Therapeutics Institute (DWTI) (4576 JP) – Q4 Follow-Up
- SIR believes DWTI has entered an exciting new phase given significant advances in pipeline development achieved over the last 12 months.
- Key advances include: publishing favorable topline results of in-house H-1337 PIIb US trials (strong prospects as “first choice as a second-line Glaucoma drug”), commencing jointly developed Japan PII clinical trials of regenerative medicine cell therapy DWR-2206 with ActualEyes, and successfully completing all transplants, completion of dosing to subjects in global Phase III clinical trials of FECD treatment K-321 being developed by licensee Kowa, and obtaining China approval for DW-1002 by licensee DORC, among others.
- Potential for earnings to turn profitable over the next several years, transitioning from the growth investment phase to the recovery phase, suggests to us share price risk is likely weighted to the upside going forward.
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