Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

HK Type 4 license through Ballingal Investment Advisors Ltd. ("BIA" or "BIAL")

BACKGROUND
I have 20+yrs experience in Asia doing alternative strategies (i.e. non-delta1 non long-only) in fixed income, equity derivatives, and activist/catalyst/event-driven and long-short equity strategies with most of that time spent managing money. 

4 years in fixed income macro, 8 years running internal hedge fund and 4yrs investment banking at Citi in Japan, 3 years running an Asia multi-strat portfolio at a hedge fund, 4+yrs as an independent special situations analyst.

Pan-Asia Catalysts/Events

Japan Exchange – Nice Way to End The Year

Gravity Works As WeWork Doesn't; Now Plan B

Dividends and Repo as Asset Classes - Focus on the Nikkei 225 Index

Quiddity Advisors

Event-Driven

When it was reported in the press and subsequently announced by Sony on the 19th of May part way through the day that Sony was going to launch a Tender Offer to take out minorities in <a href="https://www.smartkarma.com/entities/sony-financial-holdings-inc" target="_blank" data-smartkarma-citation="entities:564:1" rel="noopener">Sony Financial Holdings (8729 JP)</a> the immediate reaction of first order thinkers was to buy Sony Financial. The immediate reaction of second-order thinkers was to buy <a href="https://www.smartkarma.com/entities/japan-exchange-group-inc" target="_blank" data-smartkarma-citation="entities:11266:1" rel="noopener">Japan Exchange Group (8697 JP)</a> because taking out minorities in Sony Financial would cause it to be delisted, putting its place in the Nikkei 225 Average up for grabs. The moment the news came out the stock was ¥2,080 a share, and quickly jumped. The two-hourly chart below shows the evolution of Japan Exchange Group shares against TOPIX, setting the two at the "same" price at the time of the Sony Financial announcement. <figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/148/245/original/Screenshot%202020-07-27%20at%2010.25.57%20PM.png?1595859982" class="editor-image img-responsive" data-smartkarma-image-id="148245"></figure><div style="text-align: left;" class="content-caption">source: tradingview.com, Quiddity</div><div style="text-align: left;" class="content-caption"></div>JPX shares closed 3.7% higher that day at ¥2,166, then opened the following day at ¥2,223, traded up, then briefly lower than ¥2,223 a day later before marching higher. The shares are up 37.4% since the moment before the announcement while TOPIX is up 5.9% during the same period. The period since the Sony Financial announcement can be split into two parts. <ol>
<li>The period where Japan Exchange was the favorite to replace Sony Financial in the Nikkei 225 Average, starting at the blue vertical line, and </li>
<li>The period since when the Nikkei confirmed after the close on 15 July that indeed Japan Exchange had been selected. </li>
</ol>During the period prior to the Sony Financial news, Japan Exchange Group announced earnings (April 30 - the E in the red circle at the bottom) and the shares dipped, rebounded, and net did nothing. The subsequent rise in the share price was NOT linked to earnings. Or volume traded in the market, or really anything other than speculation on its inclusion in the Nikkei 225 Average.This insight carries a bit of analysis, and a trade recommendation. You can guess which way it tilts.The trade is later today.More below the fold...<hr>For the precursor to this insight, please see <a href="https://www.smartkarma.com/insights/nikkei-225-jpx-in-sony-financial-out" target="_blank" data-smartkarma-citation="insights:41274" rel="noopener">Nikkei 225 - JPX IN, Sony Financial OUT</a>.

When it was reported in the press and subsequently announced by Sony on the 19th of May part way through the day that Sony was going to launch a Tender Offer to take out minorities in Sony Financial Holdings (8729 JP) the immediate reaction of first order thinkers was to buy Sony Financial. The immediate reaction of second-order thinkers was to buy Japan Exchange Group (8697 JP) because taking out minorities in Sony Financial would cause it to be delisted, putting its place in the Nikkei 225 Average up for grabs. The moment the news came out the stock was ¥2,080 a share, and quickly jumped. The two-hourly chart below shows the evolution of Japan Exchange Group shares against TOPIX, setting the two at the "same" price at the time of the Sony Financial announcement. source: tradingview.com, QuiddityJPX shares closed 3.7% higher that day at ¥2,166, then opened the following day at ¥2,223, traded up, then briefly lower than ¥2,223 a day later before marching higher. The shares are up 37.4% since the moment before the announcement while TOPIX is up 5.9% during the same period. The period since the Sony Financial announcement can be split into two parts. 
The period where Japan Exchange was the favorite to replace Sony Financial in the Nikkei 225 Average, starting at the blue vertical line, and 
The period since when the Nikkei confirmed after the close on 15 July that indeed Japan Exchange had been selected. 
During the period prior to the Sony Financial news, Japan Exchange Group announced earnings (April 30 - the E in the red circle at the bottom) and the shares dipped, rebounded, and net did nothing. The subsequent rise in the share price was NOT linked to earnings. Or volume traded in the market, or really anything other than speculation on its inclusion in the Nikkei 225 Average.This insight carries a bit of analysis, and a trade recommendation. You can guess which way it tilts.The trade is later today.More below the fold...For the precursor to this insight, please see Nikkei 225 - JPX IN, Sony Financial OUT. 

Japan Exchange Group

JPX Goes In to Nikkei 225 - Time To Sell