'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

🇯🇵 JAPAN MARKET (& COVID-19) UPDATE 19th April - Overshoot

🇯🇵 JAPAN • Revisions & Results 20th April - Take Aways and LI(Not)FULL

🇯🇵 JAPAN • Revisions & Results 21st April - Catching Up : Revising Down

🇯🇵 JAPAN • Revisions & Results 13th April - A Clearer Vision

🇯🇵 JAPAN • Revisions & Results 14th April - Peak Anxiety

🇯🇵 JAPAN • Revisions & Results 15th April - Flattening

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Thematic (Sector/Industry)

Japan Consumer discretionary / Thematic (Sector/Industry)

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/128/316/original/2020-04-17_05-50-08.png?1587070274" class="editor-image img-responsive" data-smartkarma-image-id="128316"></figure><div class="content-caption">Source • @mirais_y_akai</div>CHANGE OF TACK - Many world leaders including President Trump, Boris Johnson and even Prime Minister Stefan Löfven of Sweden have seen surges in their approval ratings almost irrespective of their handling of the COVID-19 pandemic. Unfortunately, Prime Minister Abe has struggled, and his public support and approval ratings for the ruling Liberal Democratic Party are falling away.<ul>
<li>Abe has been derided for his two-mask policy, and the early recipients are claiming they are too small and shrink in when washed.</li>
<li>A PR video of the Prime Minister lounging at home with his dog was mocked, while the accompanying video of a singer was used without permission.</li>
<li>The declaration of a state of emergency in only seven prefectures has resulted in some internal migration which has spread the virus to other parts of Japan and, for example, pachinko addicts crossed from Tokyo into Chiba to play.</li>
<li>Lastly, the plan outlined in the COVID-19 supplementary budget to give needy households ¥300,000 has had to be withdrawn at the last minute in favour an immediate cash handout of ¥100,000 to all, irrespective of means or circumstance at a cost of ¥12 trillion.</li>
</ul>NATIONWIDE - Although both the number of confirmed cases and fatalities are not increasing exponentially and a lower than one week ago, Abe has decided to reclaim the initiative by announcing a nationwide state of emergency with effect from today to last until the end of the Golden Week holidays on 6th May. This period will cover ten working days. Each prefecture will determine the extent and implementation of restrictions on movement. <figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/128/317/original/2020-04-16_19-53-56.png?1587072129" class="editor-image img-responsive" data-smartkarma-image-id="128317"></figure><div class="content-caption">Source • Apple/Japan Analytics</div>ROADMAPS - Apple's excellent mobility trend <a href="https://www.apple.com/covid19/mobility" target="_blank" rel="noopener">reports</a> provide are a useful tool in assessing the responses to COVID-19 and their potential impact on economies. We have focused on driving mobility as the better proxy for overall economic activity and smoothed the weekends by using a seven-day rolling average. Even within Asia, there apparent differences between Japan and Taiwan compared to South Korea, Hong Kong and Singapore. Within Europe, the Nordic countries have seen much lower reductions than Spain or Italy. Countries with the most moderate mobility reductions should see the least-damaging economic consequences and are less likely to experience a debilitating 'second-wave.PREVENTION STRATEGIES - An interesting recent non-peer reviewed <a href="https://www.medrxiv.org/content/10.1101/2020.03.28.20036715v3" target="_blank" rel="noopener">paper</a> by German epidemiologist  Dr Knut Wittkowski suggests that while "lockdowns can be effective during the month following the peak incidence in infections.. earlier containment of low-risk people merely prolongs the time the virus needs to circulate until the incidence is high enough to initiate herd immunity. Later containment is not helpful unless to prevent a rebound if containment started too early." His modelling graphs three scenarios:-<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/128/318/original/2020-04-17_06-44-50.png?1587073534" class="editor-image img-responsive" data-smartkarma-image-id="128318"></figure>I: NO INTERVENTIONS = HERD IMMUNITY<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/128/319/original/2020-04-17_06-47-49.png?1587073689" class="editor-image img-responsive" data-smartkarma-image-id="128319"></figure>II: PHASED INTERVENTION = LOWER FATALITIES BUT LOWER IMMUNITY<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/128/320/original/2020-04-17_06-49-36.png?1587073790" class="editor-image img-responsive" data-smartkarma-image-id="128320"></figure>III: EARLY LOCKDOWN = GREATER ECONOMIC COLLATERAL DAMAGE &amp; HIGHER FATALITIES THAN CASE II + HERD IMMUNITY DELAYED BY NINE MONTHSDr Wittkowski concludes: "It is herd immunity that stops the spread of infectious disease, so, in general, one would want to let the epidemic initially run its natural course or even accelerate it...to build immunity as fast as possible. If the aim were to reduce the duration of the epidemic and its impact on the economy (and also increase the time until the next epidemic can spread), one would wait until the prevalence of infectious people reaches its peak - day 83 in the middle graph above." Japan may, more perhaps by accident than design, be following the II: Phased Intervention model above. By having avoided an early lockdown, the country may also be spared an economic catastrophe.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/128/321/original/2020-04-17_07-28-23.png?1587076129" class="editor-image img-responsive" data-smartkarma-image-id="128321"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/128/322/original/2020-04-17_07-29-01.png?1587076173" class="editor-image img-responsive" data-smartkarma-image-id="128322"></figure><div class="content-caption">Source • Japan Analytics</div>BOJ SMALL CAP BOOSTER - The Bank of Japan added to its holdings of TOPIX ETFs again yesterday and was 5.42% of TOPIX Value Traded. Their interventions are supporting TOPIX Small, which is beginning to recovery in terms of the TOPIX Small/TOPIX ratio. In the DETAIL below, we shall review the results, revisions and initial forecast announcements made yesterday.  The positive/neutral/negative balance for the two results was 2:0:0; and for the 12 revisions/forecasts, the split was 3:1:8. Leisure business <a href="https://www.smartkarma.com/entities/fujita-kanko-inc" target="_blank" data-smartkarma-citation="entities:8847:1" rel="noopener">Fujita Kanko (9722 JP)</a> withdrew its forecast for this December year-end.

Source • @mirais_y_akaiCHANGE OF TACK - Many world leaders including President Trump, Boris Johnson and even Prime Minister Stefan Löfven of Sweden have seen surges in their approval ratings almost irrespective of their handling of the COVID-19 pandemic. Unfortunately, Prime Minister Abe has struggled, and his public support and approval ratings for the ruling Liberal Democratic Party are falling away.
Abe has been derided for his two-mask policy, and the early recipients are claiming they are too small and shrink in when washed.
A PR video of the Prime Minister lounging at home with his dog was mocked, while the accompanying video of a singer was used without permission.
The declaration of a state of emergency in only seven prefectures has resulted in some internal migration which has spread the virus to other parts of Japan and, for example, pachinko addicts crossed from Tokyo into Chiba to play.
Lastly, the plan outlined in the COVID-19 supplementary budget to give needy households ¥300,000 has had to be withdrawn at the last minute in favour an immediate cash handout of ¥100,000 to all, irrespective of means or circumstance at a cost of ¥12 trillion.
NATIONWIDE - Although both the number of confirmed cases and fatalities are not increasing exponentially and a lower than one week ago, Abe has decided to reclaim the initiative by announcing a nationwide state of emergency with effect from today to last until the end of the Golden Week holidays on 6th May. This period will cover ten working days. Each prefecture will determine the extent and implementation of restrictions on movement. Source • Apple/Japan AnalyticsROADMAPS - Apple's excellent mobility trend reports provide are a useful tool in assessing the responses to COVID-19 and their potential impact on economies. We have focused on driving mobility as the better proxy for overall economic activity and smoothed the weekends by using a seven-day rolling average. Even within Asia, there apparent differences between Japan and Taiwan compared to South Korea, Hong Kong and Singapore. Within Europe, the Nordic countries have seen much lower reductions than Spain or Italy. Countries with the most moderate mobility reductions should see the least-damaging economic consequences and are less likely to experience a debilitating 'second-wave.PREVENTION STRATEGIES - An interesting recent non-peer reviewed paper by German epidemiologist  Dr Knut Wittkowski suggests that while "lockdowns can be effective during the month following the peak incidence in infections.. earlier containment of low-risk people merely prolongs the time the virus needs to circulate until the incidence is high enough to initiate herd immunity. Later containment is not helpful unless to prevent a rebound if containment started too early." His modelling graphs three scenarios:-I: NO INTERVENTIONS = HERD IMMUNITYII: PHASED INTERVENTION = LOWER FATALITIES BUT LOWER IMMUNITYIII: EARLY LOCKDOWN = GREATER ECONOMIC COLLATERAL DAMAGE &amp; HIGHER FATALITIES THAN CASE II + HERD IMMUNITY DELAYED BY NINE MONTHSDr Wittkowski concludes: "It is herd immunity that stops the spread of infectious disease, so, in general, one would want to let the epidemic initially run its natural course or even accelerate it...to build immunity as fast as possible. If the aim were to reduce the duration of the epidemic and its impact on the economy (and also increase the time until the next epidemic can spread), one would wait until the prevalence of infectious people reaches its peak - day 83 in the middle graph above." Japan may, more perhaps by accident than design, be following the II: Phased Intervention model above. By having avoided an early lockdown, the country may also be spared an economic catastrophe.Source • Japan AnalyticsBOJ SMALL CAP BOOSTER - The Bank of Japan added to its holdings of TOPIX ETFs again yesterday and was 5.42% of TOPIX Value Traded. Their interventions are supporting TOPIX Small, which is beginning to recovery in terms of the TOPIX Small/TOPIX ratio. In the DETAIL below, we shall review the results, revisions and initial forecast announcements made yesterday.  The positive/neutral/negative balance for the two results was 2:0:0; and for the 12 revisions/forecasts, the split was 3:1:8. Leisure business Fujita Kanko (9722 JP) withdrew its forecast for this December year-end.

🇯🇵 JAPAN • Revisions & Results 16th April - Roadmaps