In today’s briefing:
- The October TOPIX FFW Review and Shinsei Bank (8303)’s Future Float
- About A Gajillion Yen of Index Flows At the Close
- GMO Q2 2022 Quarterly Letter
- Nintendo (7974) | Beware of Cycles
- Rakuten: Two Consecutive Quarters of Narrowing Mobile Losses Could Change Price Momentum
- Main Issue Is the Content Rather than the Progress in Complying with the Corporate Governance Code
The October TOPIX FFW Review and Shinsei Bank (8303)’s Future Float
- This is a hybrid insight on the upcoming TOPIX FFW Review to be announced 7 October, and the situation around Shinsei Bank (8303 JP).
- Shinsei Bank is in “limbo” post control-acquisition by SBI Holdings (8473 JP) and an attempt to go over 50% should be in the works. When is not known.
- The TOPIX FFW Review should see ¥2.0-2.2trln of one-way flow, and amongst that flow, a large sell on Shinsei to increase Real World Float by 60+% and 25d of ADV.
About A Gajillion Yen of Index Flows At the Close
- Today is a day which happens twice a year in Japan.
- It is Day Before Divs Go Ex- Day. Which theoretically means a fair bit of buying.
- Nikkei 225 is pretty neutral. But there is a Nikkei 225 buy of Nidec Corp (6594 JP). TOPIX and other float market cap indices are a buy on the close.
GMO Q2 2022 Quarterly Letter
- Equity investors in countries with overvalued currencies have two ways to lose and those with undervalued currencies have two ways to win.
- Today’s strong USD looks, in the end, to be our currency and our problem.
- Keep an eye out for dangerously destructive economic policies, but don’t use that as an excuse to avoid the asset class entirely.
- The yen and euro are at their cheapest levels in decades and hedging emerging market equities would be an expensive proposition even if the currencies weren’t generally cheap versus the USD.
Nintendo (7974) | Beware of Cycles
- Nintendo’s stocked recently popped on two positive developments – Splatoon 3 sales set a record for a Switch game & Nintendo Direct announced the release date of Legend of Zelda
- Switch life cycle is coming to an end. The cycle had been extended by Covid and supply issues for Sony PS5
- Nintendo’s stock is cheap, defensive and pays a reasonable dividend, but catalysts are running out and the stock will likely follow revenues lower
Rakuten: Two Consecutive Quarters of Narrowing Mobile Losses Could Change Price Momentum
- Rakuten’s Mobile losses have held back its share price over the last few years, but it is finally starting to show some improvements with costs shrinking sequentially in 2QFY22.
- However, most investors seem to have overlooked this QoQ drop thinking that it is driven by the impact of seasonality.
- With the loss of subscribers in the previous quarter seeming temporary, we are expecting revenue growth through ARPU expansion to more than offset Rakuten Inc (4755 JP) Mobile’s cost growth.
Main Issue Is the Content Rather than the Progress in Complying with the Corporate Governance Code
- Only 12.1% of prime market listed companies have a majority of independent outside directors who can at least ensure the independence of the board of directors.
- On the nominating/compensation committees, 1/3 of companies are chaired by an inside director. Few committees have clear policies for selecting directors/CEO, and aren involved in determining compensation of individual directors.
- More companies are complying with regard to sustainability. However, it is necessary to analyze whether the target is an acceptable time frame and whether the target value is too low.
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