Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

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.

Event-Driven

<ul>
<li>After initially grinding up slowly but underperforming the Nikkei our suggested skew trade gave up ground during the new year sell off.</li>
<li>It did so slowly, however and was outperforming Nikkei when last we checked despite being down slightly. </li>
<li>Thankfully, a lot of the idiosyncratic volatility hurting the skew trade has reversed now and it is positive and outperforming Nikkei consistently.</li>
</ul>


After initially grinding up slowly but underperforming the Nikkei our suggested skew trade gave up ground during the new year sell off.
It did so slowly, however and was outperforming Nikkei when last we checked despite being down slightly. 
Thankfully, a lot of the idiosyncratic volatility hurting the skew trade has reversed now and it is positive and outperforming Nikkei consistently.


TOPIX-Nikkei Skew Trade Starting to Work Nicely

<ul>
<li>A positive earnings surprise for Fast Retailing and Microsoft’s acquisition of Activision Blizzard hitting Sony have hurt the performance of our skew trade. </li>
<li>Despite this, the dramatic fall in the Nikkei means it is now outperforming the Nikkei since we first suggested the trade. </li>
<li>Looking forward we expect recent volatility to be absorbed over time and we retain conviction on our picks.</li>
</ul>


A positive earnings surprise for Fast Retailing and Microsoft’s acquisition of Activision Blizzard hitting Sony have hurt the performance of our skew trade. 
Despite this, the dramatic fall in the Nikkei means it is now outperforming the Nikkei since we first suggested the trade. 
Looking forward we expect recent volatility to be absorbed over time and we retain conviction on our picks.


TOPIX-Nikkei Skew Trade Hit by Sony and Fast Retailing but Outperforming Nikkei

<ul>
<li>We update on our TOPIX-Nikkei Skew Trade again as we head into the end of the year with markets remaining choppy.</li>
<li>Given likely drops in liquidity but continued choppiness in markets we feel that liquidity risk will be important over the next 2-3 weeks. </li>
<li>Given that, we quite like the risk-reward skew on offer here.</li>
</ul>


We update on our TOPIX-Nikkei Skew Trade again as we head into the end of the year with markets remaining choppy.
Given likely drops in liquidity but continued choppiness in markets we feel that liquidity risk will be important over the next 2-3 weeks. 
Given that, we quite like the risk-reward skew on offer here.


We Like the TOPIX-Nikkei Skew Trade Into End of Year Liquidity Drops

<ul>
<li>At the beginning of the month, we suggested that setting up trades based on TOPIX outperforming Nikkei looked interesting. </li>
<li>This skew trade has a slight inherent short bias as Nikkei is more growth skewed but it has nevertheless generated a positive return. </li>
<li>That is despite Nikkei rising 3.8% since we published our initial note.</li>
</ul>


At the beginning of the month, we suggested that setting up trades based on TOPIX outperforming Nikkei looked interesting. 
This skew trade has a slight inherent short bias as Nikkei is more growth skewed but it has nevertheless generated a positive return. 
That is despite Nikkei rising 3.8% since we published our initial note.


Checking in on the Topix-Nikkei Skew Trade

<ul>
<li>Early last year as COVID was breaking and the BOJ doubled its ETF purchases shifting to TOPIX ETFs from Nikkei ETFs we brought up this trade. </li>
<li>With a long weekend adding to the mix conditions were abnormal but our suggested trades generated 10-12% pure alpha within four trading days. </li>
<li>This trade is starting to look interesting to us again though returns are likely to be less explosive but more persistent this time.</li>
</ul>


Early last year as COVID was breaking and the BOJ doubled its ETF purchases shifting to TOPIX ETFs from Nikkei ETFs we brought up this trade. 
With a long weekend adding to the mix conditions were abnormal but our suggested trades generated 10-12% pure alpha within four trading days. 
This trade is starting to look interesting to us again though returns are likely to be less explosive but more persistent this time.


Japan

Tokyo Electron Limited manufactures and sells industrial electronics products, such as semiconductor manufacturing machines, computer system, and electronic components.  The Company products are sold in US, Taiwan, and others as well as in Japan.

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Tokyo Electron (8035 JP)

TOPIX-Nikkei Skew Trade Starting to Work Nicely

After initially grinding up slowly but underperforming the Nikkei our suggested skew trade gave up ground during the new year sell off. It is now...

Mio Kato

TOPIX-Nikkei Skew Trade Hit by Sony and Fast Retailing but Outperforming Nikkei

Volatility in Fast Retailing and Sony have hurt the performance of our skew trade but looking forward we expect recent volatility to be absorbed...

Mio Kato

We Like the TOPIX-Nikkei Skew Trade Into End of Year Liquidity Drops

Given likely drops in liquidity but continued choppiness in markets we feel that liquidity risk will be important over the next 2-3 weeks. Given...

Mio Kato

Checking in on the Topix-Nikkei Skew Trade

Our TOPIX-Nikkei skew trade has a slight inherent short bias as Nikkei is more growth skewed but it has nevertheless generated a positive return...

Mio Kato

Revisiting the Topix-Nikkei Skew Trade

Early last year we suggested trading this skew which would have generated 10-12% pure alpha within four trading days. This trade is starting to...

Mio Kato

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