'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

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)

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/127/525/original/File%202020-04-12%203%2030%2058.jpeg?1586636737" class="editor-image img-responsive" data-smartkarma-image-id="127525"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/127/559/original/File%202020-04-12%208%2003%2009.jpeg?1586646443" class="editor-image img-responsive" data-smartkarma-image-id="127559"></figure><div class="content-caption">Source • ourworldindata.org</div><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/127/550/original/File%202020-04-12%207%2012%2036.jpeg?1586643194" class="editor-image img-responsive" data-smartkarma-image-id="127550"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/127/551/original/File%202020-04-12%207%2014%2052.jpeg?1586643688" class="editor-image img-responsive" data-smartkarma-image-id="127551"></figure><div class="content-caption">Source • Financial Times</div><p style="text-align: left;"><strong>CONTAINMENT NOT CONTAGION (SO FAR)</strong> - In the last week, the number of daily new confirmed cases of COVID-19 has increased from 300-400 to 500-600 of which Tokyo represents about one third. The case count is rising in many hitherto unaffected prefectures, partly as a result of migrations out of the seven prefectures which are under the 'state of emergency' declared on 7th April and also due to the return of asymptomatic Japanese nationals based overseas. The number of active cases (currently 6,279), those in critical care (122) and deaths (114) have yet to peak, although on a per capita basis Japan is in line with its East Asian neighbours. For the Japanese social distancing 'experiment' to be deemed successful, the 7-day rolling peak number of new cases needs to be below 1,000.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/127/573/original/IMG_1249.jpg?1586663212" class="editor-image img-responsive" data-smartkarma-image-id="127573"></figure><div class="content-caption">Source • NHK</div><p style="text-align: left;"><strong>NO-LOCKDOWN 'LOCKDOWN'</strong> - Japan's evolving compromise between social distancing and preserving the economy has revealed tensions between the central and local governments over the implementation of the powers that the former has ceded to the latter. Governor Koike had pressed for a broader range of business closures but relented over beauty salons and barbershops. DIY stores, convenience stores and restaurants can also remain open provided social distancing measures are implemented. Prefectures that were not included in the initial seven have now proposed measures of their own, including compensation for businesses forced to close which the national government has, so far, ruled out. Although no curfews have been instituted a ban on selling alcohol after seven o'clock is a reasonable 'carrot-like' alternative. From the helicopter that NHK paid to survey the scene, Tokyo was all-but-deserted on Saturday night. On Sunday. The 'recommendation' to refrain from going to bars and nightclubs has been extended to cover the whole of Japan. </p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/127/575/original/lots-of-hanko.jpg?1586663417" class="editor-image img-responsive" data-smartkarma-image-id="127575"></figure><div class="content-caption">Source • Wikimedia Commons</div><p><strong>WFH</strong> - PM Abe has very forcibly called for companies to institute 'WFH' for up to 70% of clerical staff - a factor which supports our continued bullish view for the <strong>Information Technology</strong> Sector. A Tokyo Chamber Of Commerce survey suggests that less 54% of SMEs do not intend to comply. The problem of the use of personal seals or '<em>hanko</em>' for the certification of documents remains, requiring many employees to trek into the office to affix them. Perhaps this is a business opportunity for <a href="https://www.smartkarma.com/entities/sansan-inc" target="_blank" data-smartkarma-citation="entities:28112:1" rel="noopener">Sansan (4443 JP)</a>?</p><p><strong>SIDELINED</strong> - In recent weeks, Japan's COVID-19 policy response has been led more by the Cabinet Office and Economic and Fiscal Policy Minister Yasutoshi Nishimura rather than the Kato-san of the Ministry of Health, Labour and Welfare. Kato-san and his bureaucrats have fallen out of favour for their handling of the Diamond Princess, inflexibility over testing and the rules requiring all positive cases to be hospitalised and the approval process of <a href="https://www.smartkarma.com/entities/fujifilm-holdings-corp" target="_blank" data-smartkarma-citation="entities:16353:1" rel="noopener">Fujifilm (4901 JP)</a>'s drug Avigan for use in COVID-19 cases. For better or worse, Japan's response to COVID-19 is being driven by broader considerations than the longevity of its elderly citizens.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/127/571/original/2020-04-12_12-13-13.png?1586661205" class="editor-image img-responsive" data-smartkarma-image-id="127571"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/127/572/original/2020-04-12_12-12-59.png?1586661219" class="editor-image img-responsive" data-smartkarma-image-id="127572"></figure><div class="content-caption">Source • EpiCentro/Istituto Superiore di Sanità </div><p><strong>HARD CHOICES</strong> - It is highly unlikely that Japan's first 'wave' of COVID-19 infections will peak conveniently to coincide with the Golden Week holiday period. However, as is becoming evident in New York City, the impact of 'total lockdowns' has been overestimated relative to social distancing Temporary overflow hospitals are empty, and in some US states have been closed or handed back to the military. <a href="https://www.epicentro.iss.it/en/coronavirus/bollettino/Report-COVID-2019_2_april_2020.pdf" target="_blank" rel="noopener">Evidence</a> from Italy's EpiCentro/Istituto Superiore di Sanità shows that the vast majority of fatalities are found in those over 60 years of age who have one or more comorbidity. These findings are also valid for Japan and other developed countries. As the economic cost of the moral imperative behind lockdowns becomes clear, the pressure to restart will increase, and the protocols for reaching herd immunity will be debated. The likelihood of second and third 'waves' before the widespread availability of mass-testing or vaccinees may require semi-permanent social-distancing for the most vulnerable and prolonged shutdowns of the crowded, noisy indoor venues that attract the most foolhardy. By anticipating the post-COVID protocols, The approach adopted by Taiwan, South Korea, Singapore and Japan offers a better glide-path to economic recovery. All are, however, dependent on the major Western economies, currently pickled in aspic, finding their exit strategies before summer.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/127/661/original/File%202020-04-13%205%2057%2023.jpeg?1586725178" class="editor-image img-responsive" data-smartkarma-image-id="127661"></figure><div class="content-caption">Source • gotazual@nyit.edu</div><p><strong>PRO-VAX</strong> - Another factor in Japan's favour is the country's early adoption, in 1947, of a universal childhood BCG vaccination programme. A recent <a href="https://www.medrxiv.org/content/10.1101/2020.03.24.20042937v1" target="_blank" rel="noopener">study</a> has found that "<em>countries without universal policies of BCG vaccination (Italy, Netherlands, Belgium United States) have been more severely affected compared to countries with universal and long-standing BCG policies. Countries that have a late start of universal BCG policy (Iran, 1984) had high mortality, consistent with the idea that BCG protects the vaccinated elderly population. We also found that BCG vaccination also reduced the number of reported COVID-19 cases in a country. The combination of reduced morbidity and mortality makes BCG vaccination a potential new tool in the fight against COVID-19.</em>" Ironically for President Bolsonaro, Brazil's programme started in 1920 and currently has an even lower mortality rate than Japan.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/127/583/original/File%202020-04-12%2014%2045%2024.jpeg?1586670339" class="editor-image img-responsive" data-smartkarma-image-id="127583"></figure><div class="content-caption">Source • oec.world</div><p><strong>CHINA PASSING -</strong> Of longer-term significance, Japan's COVID-19 stimulus package includes U¥220 billion to support Japanese companies moving production facilities out of China. Imports from China have fallen by more than 50% year-on-year and many Japanese manufacturers have been starved of critical components. While high-value-added parts will be shifted home, others could be sourced from SouthEast Asian countries.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/127/586/original/File%202020-04-12%2015%2002%2044.jpeg?1586671392" class="editor-image img-responsive" data-smartkarma-image-id="127586"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/127/587/original/File%202020-04-12%2015%2006%2029.jpeg?1586671741" class="editor-image img-responsive" data-smartkarma-image-id="127587"></figure><div class="content-caption">Source • McKinsey</div><p><strong>FOOD SECURITY</strong> - Meanwhile, several countries, including India, Russia, Kazakhstan, Ukraine, Vietnam, and Romania, are restricting exports of foodstuffs. Fortunately for Japan, much of the nations food imports come from the United States, Australia and Canada. Nevertheless, we expect a repeat of the 2008 food price inflation before the summer and suggest 'treading carefully; in the currently buoyant <strong>Food Beverage &amp; Tobacco</strong> Sector.</p><div>
<p><strong>SELECTIVELY BULLISH</strong> - While Japan's globally-orientated companies will struggle with almost no demand from the lockdown economies, specific domestic Sectors and Peer Groups, such as <strong>Information Technology </strong>and<strong> Internet Content &amp; Services</strong> are thriving in the COVID economy. Overall, by resisting a total lockdown, Japan remains relatively well-placed for 'the other side'. </p>
<p>In the <strong>DETAIL</strong> section below, we shall provide an update on the market overall, look at Sector and Peer Group performance and review the results and revision announcements made on Friday.</p>
<blockquote><p style="text-align: center;"><strong>It is not given to human beings - happily for them, for otherwise life would be intolerable - to foresee or to predict to any large extent the unfolding course of events." - Winston Churchill</strong></p></blockquote>
</div>

Source • ourworldindata.orgSource • Financial TimesCONTAINMENT NOT CONTAGION (SO FAR) - In the last week, the number of daily new confirmed cases of COVID-19 has increased from 300-400 to 500-600 of which Tokyo represents about one third. The case count is rising in many hitherto unaffected prefectures, partly as a result of migrations out of the seven prefectures which are under the 'state of emergency' declared on 7th April and also due to the return of asymptomatic Japanese nationals based overseas. The number of active cases (currently 6,279), those in critical care (122) and deaths (114) have yet to peak, although on a per capita basis Japan is in line with its East Asian neighbours. For the Japanese social distancing 'experiment' to be deemed successful, the 7-day rolling peak number of new cases needs to be below 1,000.Source • NHKNO-LOCKDOWN 'LOCKDOWN' - Japan's evolving compromise between social distancing and preserving the economy has revealed tensions between the central and local governments over the implementation of the powers that the former has ceded to the latter. Governor Koike had pressed for a broader range of business closures but relented over beauty salons and barbershops. DIY stores, convenience stores and restaurants can also remain open provided social distancing measures are implemented. Prefectures that were not included in the initial seven have now proposed measures of their own, including compensation for businesses forced to close which the national government has, so far, ruled out. Although no curfews have been instituted a ban on selling alcohol after seven o'clock is a reasonable 'carrot-like' alternative. From the helicopter that NHK paid to survey the scene, Tokyo was all-but-deserted on Saturday night. On Sunday. The 'recommendation' to refrain from going to bars and nightclubs has been extended to cover the whole of Japan. Source • Wikimedia CommonsWFH - PM Abe has very forcibly called for companies to institute 'WFH' for up to 70% of clerical staff - a factor which supports our continued bullish view for the Information Technology Sector. A Tokyo Chamber Of Commerce survey suggests that less 54% of SMEs do not intend to comply. The problem of the use of personal seals or 'hanko' for the certification of documents remains, requiring many employees to trek into the office to affix them. Perhaps this is a business opportunity for Sansan (4443 JP)?SIDELINED - In recent weeks, Japan's COVID-19 policy response has been led more by the Cabinet Office and Economic and Fiscal Policy Minister Yasutoshi Nishimura rather than the Kato-san of the Ministry of Health, Labour and Welfare. Kato-san and his bureaucrats have fallen out of favour for their handling of the Diamond Princess, inflexibility over testing and the rules requiring all positive cases to be hospitalised and the approval process of Fujifilm (4901 JP)'s drug Avigan for use in COVID-19 cases. For better or worse, Japan's response to COVID-19 is being driven by broader considerations than the longevity of its elderly citizens.Source • EpiCentro/Istituto Superiore di Sanità HARD CHOICES - It is highly unlikely that Japan's first 'wave' of COVID-19 infections will peak conveniently to coincide with the Golden Week holiday period. However, as is becoming evident in New York City, the impact of 'total lockdowns' has been overestimated relative to social distancing Temporary overflow hospitals are empty, and in some US states have been closed or handed back to the military. Evidence from Italy's EpiCentro/Istituto Superiore di Sanità shows that the vast majority of fatalities are found in those over 60 years of age who have one or more comorbidity. These findings are also valid for Japan and other developed countries. As the economic cost of the moral imperative behind lockdowns becomes clear, the pressure to restart will increase, and the protocols for reaching herd immunity will be debated. The likelihood of second and third 'waves' before the widespread availability of mass-testing or vaccinees may require semi-permanent social-distancing for the most vulnerable and prolonged shutdowns of the crowded, noisy indoor venues that attract the most foolhardy. By anticipating the post-COVID protocols, The approach adopted by Taiwan, South Korea, Singapore and Japan offers a better glide-path to economic recovery. All are, however, dependent on the major Western economies, currently pickled in aspic, finding their exit strategies before summer.Source • gotazual@nyit.eduPRO-VAX - Another factor in Japan's favour is the country's early adoption, in 1947, of a universal childhood BCG vaccination programme. A recent study has found that "countries without universal policies of BCG vaccination (Italy, Netherlands, Belgium United States) have been more severely affected compared to countries with universal and long-standing BCG policies. Countries that have a late start of universal BCG policy (Iran, 1984) had high mortality, consistent with the idea that BCG protects the vaccinated elderly population. We also found that BCG vaccination also reduced the number of reported COVID-19 cases in a country. The combination of reduced morbidity and mortality makes BCG vaccination a potential new tool in the fight against COVID-19." Ironically for President Bolsonaro, Brazil's programme started in 1920 and currently has an even lower mortality rate than Japan.Source • oec.worldCHINA PASSING - Of longer-term significance, Japan's COVID-19 stimulus package includes U¥220 billion to support Japanese companies moving production facilities out of China. Imports from China have fallen by more than 50% year-on-year and many Japanese manufacturers have been starved of critical components. While high-value-added parts will be shifted home, others could be sourced from SouthEast Asian countries.Source • McKinseyFOOD SECURITY - Meanwhile, several countries, including India, Russia, Kazakhstan, Ukraine, Vietnam, and Romania, are restricting exports of foodstuffs. Fortunately for Japan, much of the nations food imports come from the United States, Australia and Canada. Nevertheless, we expect a repeat of the 2008 food price inflation before the summer and suggest 'treading carefully; in the currently buoyant Food Beverage &amp; Tobacco Sector.
SELECTIVELY BULLISH - While Japan's globally-orientated companies will struggle with almost no demand from the lockdown economies, specific domestic Sectors and Peer Groups, such as Information Technology and Internet Content &amp; Services are thriving in the COVID economy. Overall, by resisting a total lockdown, Japan remains relatively well-placed for 'the other side'. 
In the DETAIL section below, we shall provide an update on the market overall, look at Sector and Peer Group performance and review the results and revision announcements made on Friday.
It is not given to human beings - happily for them, for otherwise life would be intolerable - to foresee or to predict to any large extent the unfolding course of events." - Winston Churchill


🇯🇵 JAPAN MARKET (& COVID-19) UPDATE - 12th April • To Each Their Own

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Quantitative Analysis

<div><p>The short notional in the market for the data released 7 April is US$33.02bn (up by US$1,509mm excluding FX movements and ETFs) with the largest short positions in <a href="https://www.smartkarma.com/entities/fast-retailing-co-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:751:1">Fast Retailing (9983 JP)</a>, <a href="https://www.smartkarma.com/entities/itochu-corp" target="_blank" rel="noopener" data-smartkarma-citation="entities:18448:1">Itochu Corp (8001 JP)</a>, <a href="https://www.smartkarma.com/entities/canon-inc" target="_blank" rel="noopener" data-smartkarma-citation="entities:1:1">Canon Inc (7751 JP)</a>, <a href="https://www.smartkarma.com/entities/toyota-motor-corp" target="_blank" rel="noopener" data-smartkarma-citation="entities:73:1">Toyota Motor (7203 JP)</a> and <a href="https://www.smartkarma.com/entities/shiseido-co-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:5718:1">Shiseido Co Ltd (4911 JP)</a>.</p></div><div><p>Most shorted stocks as a percentage of free float are <a href="https://www.smartkarma.com/entities/anritsu-corp" target="_blank" rel="noopener" data-smartkarma-citation="entities:3700:1">Anritsu Corp (6754 JP)</a>, <a href="https://www.smartkarma.com/entities/aruhi-corp" target="_blank" rel="noopener" data-smartkarma-citation="entities:26072:1">Aruhi Corp (7198 JP)</a>, <a href="https://www.smartkarma.com/entities/taiyo-yuden-co-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:9924:1">Taiyo Yuden (6976 JP)</a> and <a href="https://www.smartkarma.com/entities/nitta-gelatin-inc" target="_blank" rel="noopener" data-smartkarma-citation="entities:1481:1">Nitta Gelatin (4977 JP)</a> <a href="https://www.smartkarma.com/entities/leopalace21-corp" target="_blank" rel="noopener" data-smartkarma-citation="entities:8244:1"></a>while the stocks with the highest days to cover are <a href="https://www.smartkarma.com/entities/nitta-gelatin-inc" target="_blank" rel="noopener" data-smartkarma-citation="entities:1481:1">Nitta Gelatin (4977 JP)</a>, <a href="https://www.smartkarma.com/entities/aruhi-corp" target="_blank" rel="noopener" data-smartkarma-citation="entities:26072:1">Aruhi Corp (7198 JP)</a>, <a href="https://www.smartkarma.com/entities/vital-ksk-holdings-inc" target="_blank" rel="noopener" data-smartkarma-citation="entities:7398:1">Vital Ksk Holdings (3151 JP)</a>, <a href="https://www.smartkarma.com/entities/katakura-industries-co-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:2007:1">Katakura Industries (3001 JP)</a> and <a href="https://www.smartkarma.com/entities/yumeshin-holdings-co-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:12939:1">Yumeshin Holdings (2362 JP)</a>.</p></div><div><p>The largest increases in short notional over the week were <a href="https://www.smartkarma.com/entities/canon-inc" target="_blank" rel="noopener" data-smartkarma-citation="entities:1:1">Canon Inc (7751 JP)</a>, <a href="https://www.smartkarma.com/entities/softbank-corp" target="_blank" rel="noopener" data-smartkarma-citation="entities:27445:1">Softbank Corp (9434 JP)</a>, <a href="https://www.smartkarma.com/entities/chugai-pharmaceutical-co-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:4489:1">Chugai Pharmaceutical (4519 JP)</a> and <a href="https://www.smartkarma.com/entities/yaskawa-electric-corp" target="_blank" rel="noopener" data-smartkarma-citation="entities:2458:1">Yaskawa Electric (6506 JP)</a> while shorts were covered in <a href="https://www.smartkarma.com/entities/kao-corp" target="_blank" rel="noopener" data-smartkarma-citation="entities:12933:1">Kao Corp (4452 JP)</a>, <a href="https://www.smartkarma.com/entities/fuji-heavy-industries-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:5439:1">Subaru Corp (7270 JP)</a>, <a href="https://www.smartkarma.com/entities/m3-inc" target="_blank" rel="noopener" data-smartkarma-citation="entities:13316:1">M3 Inc (2413 JP)</a> and <a href="https://www.smartkarma.com/entities/trend-micro-inc" target="_blank" rel="noopener" data-smartkarma-citation="entities:13172:1">Trend Micro Inc (4704 JP)</a>.</p></div><div><p>Sectorally, short positions increased in all sectors led by Information Technology (US$345m), Communication Services (US$324m), Industrials (US$264m), Materials (US$154m) and Consumer Discretionary (US$153m).</p></div>

The short notional in the market for the data released 7 April is US$33.02bn (up by US$1,509mm excluding FX movements and ETFs) with the largest short positions in Fast Retailing (9983 JP), Itochu Corp (8001 JP), Canon Inc (7751 JP), Toyota Motor (7203 JP) and Shiseido Co Ltd (4911 JP).Most shorted stocks as a percentage of free float are Anritsu Corp (6754 JP), Aruhi Corp (7198 JP), Taiyo Yuden (6976 JP) and Nitta Gelatin (4977 JP) while the stocks with the highest days to cover are Nitta Gelatin (4977 JP), Aruhi Corp (7198 JP), Vital Ksk Holdings (3151 JP), Katakura Industries (3001 JP) and Yumeshin Holdings (2362 JP).The largest increases in short notional over the week were Canon Inc (7751 JP), Softbank Corp (9434 JP), Chugai Pharmaceutical (4519 JP) and Yaskawa Electric (6506 JP) while shorts were covered in Kao Corp (4452 JP), Subaru Corp (7270 JP), M3 Inc (2413 JP) and Trend Micro Inc (4704 JP).Sectorally, short positions increased in all sectors led by Information Technology (US$345m), Communication Services (US$324m), Industrials (US$264m), Materials (US$154m) and Consumer Discretionary (US$153m).

The Big Short: All Sectors See An Increase

<div><p>The short notional in the market for the data released 17 March is US$22.75bn (up by US$604mm excluding FX movements) with the largest short positions in <a href="https://www.smartkarma.com/entities/itochu-corp" target="_blank" rel="noopener" data-smartkarma-citation="entities:18448:1">Itochu Corp (8001 JP)</a>, <a href="https://www.smartkarma.com/entities/toyota-motor-corp" target="_blank" rel="noopener" data-smartkarma-citation="entities:73:1">Toyota Motor (7203 JP)</a>, <a href="https://www.smartkarma.com/entities/fast-retailing-co-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:751:1">Fast Retailing (9983 JP)</a>, <a href="https://www.smartkarma.com/entities/canon-inc" target="_blank" rel="noopener" data-smartkarma-citation="entities:1:1">Canon Inc (7751 JP)</a> and <a href="https://www.smartkarma.com/entities/taiyo-yuden-co-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:9924:1">Taiyo Yuden (6976 JP)</a>.</p></div><div><p>Most shorted stocks as a percentage of free float are <a href="https://www.smartkarma.com/entities/anritsu-corp" target="_blank" rel="noopener" data-smartkarma-citation="entities:3700:1">Anritsu Corp (6754 JP)</a>, <a href="https://www.smartkarma.com/entities/taiyo-yuden-co-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:9924:1">Taiyo Yuden (6976 JP)</a>, <a href="https://www.smartkarma.com/entities/aruhi-corp" target="_blank" rel="noopener" data-smartkarma-citation="entities:26072:1">Aruhi Corp (7198 JP)</a> and <a href="https://www.smartkarma.com/entities/tokai-carbon-co-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:9145:1">Tokai Carbon (5301 JP)</a> while the stocks with the highest days to cover are <a href="https://www.smartkarma.com/entities/nitta-gelatin-inc" target="_blank" rel="noopener" data-smartkarma-citation="entities:1481:1">Nitta Gelatin (4977 JP)</a>, <a href="https://www.smartkarma.com/entities/vital-ksk-holdings-inc" target="_blank" rel="noopener" data-smartkarma-citation="entities:7398:1">Vital Ksk Holdings (3151 JP)</a>, <a href="https://www.smartkarma.com/entities/j-trust-co-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:20246:1">J Trust Co Ltd (8508 JP)</a>, <a href="https://www.smartkarma.com/entities/katakura-industries-co-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:2007:1">Katakura Industries (3001 JP)</a> and <a href="https://www.smartkarma.com/entities/itochu-corp" target="_blank" rel="noopener" data-smartkarma-citation="entities:18448:1">Itochu Corp (8001 JP)</a>. </p></div><div><p>The largest increases in short notional over the week were <a href="https://www.smartkarma.com/entities/familymart-co-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:320:1">Familymart UNY Holdings (8028 JP)</a>, <a href="https://www.smartkarma.com/entities/mitsubishi-ufj-financial-gro" target="_blank" rel="noopener" data-smartkarma-citation="entities:218:1">Mitsubishi UFJ Financial (MUFG) (8306 JP)</a>, <a href="https://www.smartkarma.com/entities/nippon-steel-corporation" target="_blank" rel="noopener" data-smartkarma-citation="entities:961:1">Nippon Steel Corporation (5401 JP)</a> and <a href="https://www.smartkarma.com/entities/trend-micro-inc" target="_blank" rel="noopener" data-smartkarma-citation="entities:13172:1">Trend Micro Inc (4704 JP)</a> while shorts were covered in <a href="https://www.smartkarma.com/entities/seven-i-holdings-co-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:1041:1">Seven &amp; I Holdings (3382 JP)</a>, <a href="https://www.smartkarma.com/entities/fuji-heavy-industries-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:5439:1">Subaru Corp (7270 JP)</a>, <a href="https://www.smartkarma.com/entities/kao-corp" target="_blank" rel="noopener" data-smartkarma-citation="entities:12933:1">Kao Corp (4452 JP)</a> and <a href="https://www.smartkarma.com/entities/fast-retailing-co-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:751:1">Fast Retailing (9983 JP)</a>.   <a href="https://www.smartkarma.com/entities/tokai-carbon-co-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:9145:1"></a></p></div><div><p>Sectorally, short positions increased in Industrials (US$188m), Information Technology (US$186m) and Materials (US$139m), while shorts were covered in Consumer Staples (US$46m) and Consumer Discretionary (US$20m).</p></div>

The short notional in the market for the data released 17 March is US$22.75bn (up by US$604mm excluding FX movements) with the largest short positions in Itochu Corp (8001 JP), Toyota Motor (7203 JP), Fast Retailing (9983 JP), Canon Inc (7751 JP) and Taiyo Yuden (6976 JP).Most shorted stocks as a percentage of free float are Anritsu Corp (6754 JP), Taiyo Yuden (6976 JP), Aruhi Corp (7198 JP) and Tokai Carbon (5301 JP) while the stocks with the highest days to cover are Nitta Gelatin (4977 JP), Vital Ksk Holdings (3151 JP), J Trust Co Ltd (8508 JP), Katakura Industries (3001 JP) and Itochu Corp (8001 JP). The largest increases in short notional over the week were Familymart UNY Holdings (8028 JP), Mitsubishi UFJ Financial (MUFG) (8306 JP), Nippon Steel Corporation (5401 JP) and Trend Micro Inc (4704 JP) while shorts were covered in Seven &amp; I Holdings (3382 JP), Subaru Corp (7270 JP), Kao Corp (4452 JP) and Fast Retailing (9983 JP).   Sectorally, short positions increased in Industrials (US$188m), Information Technology (US$186m) and Materials (US$139m), while shorts were covered in Consumer Staples (US$46m) and Consumer Discretionary (US$20m).

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. 

<div><p style="text-align: center;"><strong> • RELATIVE PRICE SCORE - COMPANIES •</strong></p></div><div>
<strong>RELATIVE PRICE SCORE OUTLIERS </strong>- The Relative Price Score (RPS) is a measure of price performance relative to TOPIX calculated by comparing the current deviation with the mean absolute deviation of monthly and daily relative share prices over the last 28 years and 24 months, respectively. As all companies are put on a comparable scale, 'Overbought' and 'Oversold' outliers and short-term changes in scoring can reveal attractive trading opportunities. Company outlier thresholds are set at +4 &amp; -2 and equate to the top and bottom first-to-second percentiles of historical observations from which mean reversion takes a matter of months.</div><div></div><div>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/120/886/original/2020-03-02_09-36-07.png?1583109407" class="editor-image img-responsive" data-smartkarma-image-id="120886"></figure><div class="content-caption">Source • Japan Analytics</div>
<p><strong>OVERBOUGHT MEAN REVERSION</strong> - Examples of larger-cap companies that have reverted from being Overbought in the last quarter are <a href="https://www.smartkarma.com/entities/systena-corp" target="_blank" data-smartkarma-citation="entities:20438:1" rel="noopener">Systena (2317 JP)</a> which was Very Overbought two quarters ago, <a href="https://www.smartkarma.com/entities/kotobuki-spirits-co-ltd" target="_blank" data-smartkarma-citation="entities:20062:1" rel="noopener">Kotobuki Spirits (2222 JP)</a>, <a href="https://www.smartkarma.com/entities/toei-co-ltd" target="_blank" data-smartkarma-citation="entities:15379:1" rel="noopener">Toei (9605 JP)</a>, and the amusement park operator <a href="https://www.smartkarma.com/entities/fuji-kyuko-co-ltd" target="_blank" data-smartkarma-citation="entities:1305:1" rel="noopener">Fuji Kyuko (9010 JP)</a>, which began to mean-revert well before the emergence of Covid-19. The average decline from their peak of these stocks is 34%, which compares with an 11% decline for the market overall.</p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/120/887/original/2020-03-02_09-42-41.png?1583109791" class="editor-image img-responsive" data-smartkarma-image-id="120887"></figure><div class="content-caption">Source • Japan Analytics</div>
<p><strong>OVERSOLD MEAN REVERSION</strong> - The four large caps that have reverted from being Oversold have outperformed by over 20% on average, led by <a href="https://www.smartkarma.com/entities/mercari-inc" target="_blank" data-smartkarma-citation="entities:27149:1" rel="noopener">Mercari (4385 JP)</a> which we suggested was <em>'due for another bounce</em>' in our December Insight. Otherwise, <a href="https://www.smartkarma.com/entities/japan-post-bank-co-ltd" target="_blank" data-smartkarma-citation="entities:838:1" rel="noopener">Japan Post Bank (7182 JP)</a>, <a href="https://www.smartkarma.com/entities/chugoku-electric-power-co" target="_blank" data-smartkarma-citation="entities:16243:1" rel="noopener">Chugoku Electric Power (9504 JP)</a>, <a href="https://www.smartkarma.com/entities/tv-asahi-holdings-corp" target="_blank" data-smartkarma-citation="entities:8830:1" rel="noopener">Tv Asahi (9409 JP)</a>, and <a href="https://www.smartkarma.com/entities/suntory-beverage-food-ltd" target="_blank" data-smartkarma-citation="entities:8218:1" rel="noopener">Suntory Beverage &amp; Food (2587 JP)</a> all saw substantial recoveries.</p>
</div><div></div><div><div class="content-highlight"><p>Following on from our previous Insight <a href="https://www.smartkarma.com/insights/japan-march-sector-peer-group-relative-price-scores" target="_blank" data-smartkarma-citation="insights:36972" rel="noopener">March Sector &amp; Peer Group Relative Price Scores -</a>  which covered Sectors and Peer Groups, in the<strong> DETAIL </strong>section below, we update our list of Overbought and Oversold large-cap companies (market capitalisation over ¥100b) with the current Very Overbought (RPS&gt;5), Too-Late-To-Buy (RPS &gt;4.5) and Oversold (RPS &lt;-2) companies, as well as the largest positive and negative 3-month Changes in RPS adding some stock-specific comments in each category.</p></div></div>

 • RELATIVE PRICE SCORE - COMPANIES •
RELATIVE PRICE SCORE OUTLIERS - The Relative Price Score (RPS) is a measure of price performance relative to TOPIX calculated by comparing the current deviation with the mean absolute deviation of monthly and daily relative share prices over the last 28 years and 24 months, respectively. As all companies are put on a comparable scale, 'Overbought' and 'Oversold' outliers and short-term changes in scoring can reveal attractive trading opportunities. Company outlier thresholds are set at +4 &amp; -2 and equate to the top and bottom first-to-second percentiles of historical observations from which mean reversion takes a matter of months.
Source • Japan Analytics
OVERBOUGHT MEAN REVERSION - Examples of larger-cap companies that have reverted from being Overbought in the last quarter are Systena (2317 JP) which was Very Overbought two quarters ago, Kotobuki Spirits (2222 JP), Toei (9605 JP), and the amusement park operator Fuji Kyuko (9010 JP), which began to mean-revert well before the emergence of Covid-19. The average decline from their peak of these stocks is 34%, which compares with an 11% decline for the market overall.
Source • Japan Analytics
OVERSOLD MEAN REVERSION - The four large caps that have reverted from being Oversold have outperformed by over 20% on average, led by Mercari (4385 JP) which we suggested was 'due for another bounce' in our December Insight. Otherwise, Japan Post Bank (7182 JP), Chugoku Electric Power (9504 JP), Tv Asahi (9409 JP), and Suntory Beverage &amp; Food (2587 JP) all saw substantial recoveries.
Following on from our previous Insight March Sector &amp; Peer Group Relative Price Scores -  which covered Sectors and Peer Groups, in the DETAIL section below, we update our list of Overbought and Oversold large-cap companies (market capitalisation over ¥100b) with the current Very Overbought (RPS&gt;5), Too-Late-To-Buy (RPS &gt;4.5) and Oversold (RPS &lt;-2) companies, as well as the largest positive and negative 3-month Changes in RPS adding some stock-specific comments in each category.

🇯🇵 JAPAN • March Company Relative Price Scores - Playing the Extremes

Equity Analyst, LightStream Research

Shifara Samsudeen, FCMA, CGMA

Equity Analyst

Equity Bottom-Up

<p>This is the <strong>THIRD</strong> of a series of reports on Midea Corp. where we will be focusing on the company’s Robotics and Automation Systems segment. Midea has entered into the industrial robots and automation market in 2016 through the acquisition of Kuka, a German-based company offering automation and robotic systems. The Robotics &amp; Automation systems segment of Midea generated about 11% of the revenue in 2018 and we expect the segment’s revenue to grow at a CAGR of 10% over the next 4-years driven by growth in demand for robots and automation systems globally.</p><p>China is the world’s largest market for industrial robots which accounted for about 36% of total installations in 2018. Despite China accounting for the highest share of the global industrial robot market, the manufacturing robot density in China is still considerably lower compared to countries such as Japan, South Korea, Taiwan and Singapore. The Chinese government has implemented several policy measures to increase factory automation and robotics usage in the country due to increasing wage rates and growing ageing population in China. While the demand for industrial robots is expected to grow globally, we expect China to continue to account for majority of this growth over the next couple of years given its lower robot penetration and the government of China’s initiatives towards promoting automation.</p><p>Kuka currently has limited exposure in the Asian market where it generates a majority of its revenue in Europe followed by North America. We expect the company’s revenue share from China to grow over the forecast period.</p><p>Midea is the only domestic player in China who has exposure to high-end industrial robotics market. The Chinese industrial robot market is dominated by foreign players like Fanuc, Yaskawa and ABB, whereas Kuka is ranked fourth in China. According to Statista, Kuka was ranked the fifth largest player globally in 2017. The company previously had limited exposure into the Chinese market and with Midea acquiring the Kuka, the company has been expanding extensively in China using Midea’s existing network of clients.</p>

This is the THIRD of a series of reports on Midea Corp. where we will be focusing on the company’s Robotics and Automation Systems segment. Midea has entered into the industrial robots and automation market in 2016 through the acquisition of Kuka, a German-based company offering automation and robotic systems. The Robotics &amp; Automation systems segment of Midea generated about 11% of the revenue in 2018 and we expect the segment’s revenue to grow at a CAGR of 10% over the next 4-years driven by growth in demand for robots and automation systems globally.China is the world’s largest market for industrial robots which accounted for about 36% of total installations in 2018. Despite China accounting for the highest share of the global industrial robot market, the manufacturing robot density in China is still considerably lower compared to countries such as Japan, South Korea, Taiwan and Singapore. The Chinese government has implemented several policy measures to increase factory automation and robotics usage in the country due to increasing wage rates and growing ageing population in China. While the demand for industrial robots is expected to grow globally, we expect China to continue to account for majority of this growth over the next couple of years given its lower robot penetration and the government of China’s initiatives towards promoting automation.Kuka currently has limited exposure in the Asian market where it generates a majority of its revenue in Europe followed by North America. We expect the company’s revenue share from China to grow over the forecast period.Midea is the only domestic player in China who has exposure to high-end industrial robotics market. The Chinese industrial robot market is dominated by foreign players like Fanuc, Yaskawa and ABB, whereas Kuka is ranked fourth in China. According to Statista, Kuka was ranked the fifth largest player globally in 2017. The company previously had limited exposure into the Chinese market and with Midea acquiring the Kuka, the company has been expanding extensively in China using Midea’s existing network of clients.

KUKA - Midea’s Key to Automation and an Integral Part of Its Long-Term Strategy

Japan

YASKAWA Electric Corporation manufactures and markets servomotors, controllers, inverters, and industrial robots.  The Company's products include spindle controllers, computerized numerical control (CNC) systems, and system engineering.

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Yaskawa Electric (6506 JP)

🇯🇵 JAPAN MARKET (& COVID-19) UPDATE - 12th April • To Each Their Own

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The short notional in the market for the data released 17 March is US$22.75bn (up by US$604mm excluding FX movements) with the largest short...

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🇯🇵 JAPAN • March Company Relative Price Scores - Playing the Extremes

• RELATIVE PRICE SCORE - COMPANIES • RELATIVE PRICE SCORE OUTLIERS - The Relative Price Score (RPS) is a measure of price performance relative to...

Campbell Gunn

KUKA - Midea’s Key to Automation and an Integral Part of Its Long-Term Strategy

This is the THIRD of a series of reports on Midea Corp. where we will be focusing on the company’s Robotics and Automation Systems segment. Midea...

Shifara Samsudeen, FCMA, CGMA

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