'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

Former Japan Equity PM with over 30 of experience now providing database-driven analysis of the market, sectors, peer groups and stocks for LightStream Research.

Leveraging data and graphic analysis provided by Japan Analytics, and the related Japan Analytics iPad App, we provide insights on companies are often ignored by the sell-side as well as challenging conventional wisdom on the market overall.

'Quantamental' Japan Specialist

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ja research

ja research is an independent research platform focused exclusively on Japanese equities. Leveraging data and graphic analysis provided by Japan Analytics, we provide insights on small and medium-sized companies that have been ignored by the sell-side as well as challenging conventional wisdom on larger companies. We also offer analyst and corporate access, the latter with translation if required. 

Thematic (Sector/Industry)

Japan Industrials / Thematic (Sector/Industry)

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/113/443/original/2020-01-12_08-39-38.png?1578786002" class="editor-image img-responsive" data-smartkarma-image-id="113443"></figure><div class="content-caption">Source: Japan Analytics</div><p><strong>MIND THE GAP </strong>- Friday was the 'peak' day for quarterly results and revisions for companies with February. May, August and November year-ends with 138 results and 44 revision announcements. Unfortunately for the 'bulls' of Japanese equities, there has so far been no sign that the downturn in the business cycle is over. The 'positive gap' between market expectations as implied by the Total Market Value excluding REITs (TMV), and corporate trailing and forecast revenues and profits, as measured by our Results and Forecast/Revision Scores, respectively, has never been wider than at present.</p><p><strong>MARKET DISSONANCE</strong> - This dissonance has been fuelled to a high degree by global central bank liquidity provision, most notably, in the case of Japan, by the Bank of Japan's purchases of Exchange-Traded Funds. Such actions have created a false market in Japanese equities which have been prevented from 'clearing' to previous cycle lows during the 2014/16 down cycle and the current downturn which commenced in early 2018. Japan's TMV is within 4% of a thirty-year post-bubble high when our Forecast/Revision Score is within 72 bps of a ten-year low. Japan is far from unique in this regard - a similar '<em>waniguchi'</em> or crocodile mouth has opened up in the US.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/113/505/original/2020-01-13_08-02-56.png?1578870202" class="editor-image img-responsive" data-smartkarma-image-id="113505"></figure><div class="content-caption">Source: Japan Analytics</div><p><strong>BACK TO THE FUTURE</strong> - The Cabinet Office Business Conditions Leading Indicator continues to fall and is at levels last seen in 2009. There is a good correlation between this Indicator and our Results and Forecast/Revision Scores and, for now, a turning point is not in sight.</p><p><strong>TOO EARLY TO CALL </strong>- Next month's third-quarter results for the majority of listed companies and full-year results and 2020 forecasts for the 444 companies with December year-ends, will likely see further declines in both Results and Forecast/Revision Scores. We expect the Forecast/Revision Score to bottom out in May with the new fiscal year outlook for March year-end companies, with the Results Score following in August. As both of these events appear to be well-discounted by the rally over the last two months, Japanese equities could well 'mark-time' for the next six months.</p><div class="content-highlight"><p>In the <strong><a href="https://www.smartkarma.com/compose/insight/35748/z" target="_blank" rel="noopener">DETAIL</a></strong>Section below, we provide an update on current market trends and review the performance of Sectors, Peer Groups and selected companies.</p></div>

Source: Japan AnalyticsMIND THE GAP - Friday was the 'peak' day for quarterly results and revisions for companies with February. May, August and November year-ends with 138 results and 44 revision announcements. Unfortunately for the 'bulls' of Japanese equities, there has so far been no sign that the downturn in the business cycle is over. The 'positive gap' between market expectations as implied by the Total Market Value excluding REITs (TMV), and corporate trailing and forecast revenues and profits, as measured by our Results and Forecast/Revision Scores, respectively, has never been wider than at present.MARKET DISSONANCE - This dissonance has been fuelled to a high degree by global central bank liquidity provision, most notably, in the case of Japan, by the Bank of Japan's purchases of Exchange-Traded Funds. Such actions have created a false market in Japanese equities which have been prevented from 'clearing' to previous cycle lows during the 2014/16 down cycle and the current downturn which commenced in early 2018. Japan's TMV is within 4% of a thirty-year post-bubble high when our Forecast/Revision Score is within 72 bps of a ten-year low. Japan is far from unique in this regard - a similar 'waniguchi' or crocodile mouth has opened up in the US.Source: Japan AnalyticsBACK TO THE FUTURE - The Cabinet Office Business Conditions Leading Indicator continues to fall and is at levels last seen in 2009. There is a good correlation between this Indicator and our Results and Forecast/Revision Scores and, for now, a turning point is not in sight.TOO EARLY TO CALL - Next month's third-quarter results for the majority of listed companies and full-year results and 2020 forecasts for the 444 companies with December year-ends, will likely see further declines in both Results and Forecast/Revision Scores. We expect the Forecast/Revision Score to bottom out in May with the new fiscal year outlook for March year-end companies, with the Results Score following in August. As both of these events appear to be well-discounted by the rally over the last two months, Japanese equities could well 'mark-time' for the next six months.In the DETAILSection below, we provide an update on current market trends and review the performance of Sectors, Peer Groups and selected companies.

🇯🇵 JAPAN • Market Update - Mind the Gap!