Director, Head of Research, Smartkarma

Pranav Rao

Director, Head of Research

Smartkarma

Smartkarma unites the fragmented investment industry, connecting institutional investors, independent research providers, and corporates within a single network.

Research Reinvented

Equity Bottom-Up

<ul>
<li>Welcome to Curator’s Cut - a fortnightly roundup of standout themes from the 2,000+ insights published on Smartkarma.</li>
<li>In this cut, we examine the windfall for brokers amid market volatility and other tailwinds, index rule changes to accommodate megacap IPOs, and the prospects in markets for physical AI.</li>
<li>Want to dig deeper? Comment or message with the themes you’d like to see highlighted next.</li>
</ul>


Welcome to Curator’s Cut - a fortnightly roundup of standout themes from the 2,000+ insights published on Smartkarma.
In this cut, we examine the windfall for brokers amid market volatility and other tailwinds, index rule changes to accommodate megacap IPOs, and the prospects in markets for physical AI.
Want to dig deeper? Comment or message with the themes you’d like to see highlighted next.


Curator's Cut: Brokering Records, Race to SpaceX & The Rise of Physical AI

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Index Rebalance

Nomura Research Institute / Index Rebalance

<ul>
<li>
<a href="https://www.smartkarma.com/entities/nomura-research-institute-ltd" target="_blank" data-smartkarma-citation="entities:18129:1" rel="noopener">Nomura Research Institute (4307 JP)</a> and <a href="https://www.smartkarma.com/entities/ryohin-keikaku-co-ltd" target="_blank" data-smartkarma-citation="entities:2765:1" rel="noopener">Ryohin Keikaku (7453 JP)</a> will replace <a href="https://www.smartkarma.com/entities/nippon-paper-industries-co-l" target="_blank" data-smartkarma-citation="entities:557:1" rel="noopener">Nippon Paper Industries Co L (3863 JP)</a> and <a href="https://www.smartkarma.com/entities/dic-corp" target="_blank" data-smartkarma-citation="entities:7343:1" rel="noopener">Dic Corp (4631 JP)</a> in the <a href="https://www.smartkarma.com/entities/nikkei-225" target="_blank" data-smartkarma-citation="entities:22909:1" rel="noopener">Nikkei 225 (NKY INDEX)</a>. </li>
<li>
<a href="https://www.smartkarma.com/entities/fast-retailing-co-ltd" target="_blank" data-smartkarma-citation="entities:751:1" rel="noopener">Fast Retailing (9983 JP)</a>'s CPAF will drop from 3 to 2.7 and there will be further selling in March 2025 as the CPAF drops to 2.4 (or possibly even 2.1!) </li>
<li>Passives will need to buy 7-15x ADV (13-14% of real float) in the adds and sell 2.7-6.5x ADV in the deletes. There is a big reverse funding trade too.</li>
</ul>



Nomura Research Institute (4307 JP) and Ryohin Keikaku (7453 JP) will replace Nippon Paper Industries Co L (3863 JP) and Dic Corp (4631 JP) in the Nikkei 225 (NKY INDEX). 

Fast Retailing (9983 JP)'s CPAF will drop from 3 to 2.7 and there will be further selling in March 2025 as the CPAF drops to 2.4 (or possibly even 2.1!) 
Passives will need to buy 7-15x ADV (13-14% of real float) in the adds and sell 2.7-6.5x ADV in the deletes. There is a big reverse funding trade too.


Nikkei 225 Index Rebalance: NRI, Ryohin Keikaku IN; Nippon Paper, DIC OUT; Fast Retailing Capped

Senior Technology Analyst, Japanese Equities, LightStream Research

Scott Foster

Senior Technology Analyst, Japanese Equities

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.

<ul>
<li>With Fanuc's stock price down 12% in the past two weeks, short-term profit taking may have run its course. . </li>
<li>Management has lowered FY Mar-26 profit guidance while raising sales guidance -  not a good sign. </li>
<li>Not cheap at 36x new EPS guidance, particularly since AI, which management touts as one of the company's strengths, is becoming an industry standard.</li>
</ul>


With Fanuc's stock price down 12% in the past two weeks, short-term profit taking may have run its course. . 
Management has lowered FY Mar-26 profit guidance while raising sales guidance -  not a good sign. 
Not cheap at 36x new EPS guidance, particularly since AI, which management touts as one of the company's strengths, is becoming an industry standard.


Fanuc (6954 JP): Sales Strong, Margins Slipping

Smartkarma AI Primers, Smartkarma

αSK Primers

Smartkarma AI Primers

<ul>
 <li>
Dominant Market Leader with a Wide Moat: Fanuc is a global leader in factory automation, holding significant market share in CNC systems (estimated at 65%) and industrial robots. Its competitive advantages are rooted in technological prowess, a reputation for reliability, high switching costs for customers, and an extensive global service network.</li>
 <li>
Poised to Capitalize on Secular Growth in Automation: The company is well-positioned to benefit from long-term structural tailwinds, including rising labor costs, skilled labor shortages, reshoring of manufacturing, and increased demand for automation in emerging sectors like electric vehicle (EV) production and electronics.</li>
 <li>
Cyclical Headwinds and Competitive Intensity Present Risks: Fanuc's financial performance is closely tied to global capital expenditure cycles, making it susceptible to economic downturns. The factory automation market is also highly competitive, with major players like ABB, Yaskawa, and Siemens vying for market share, which can pressure pricing and margins.</li>
</ul>This content is AI-generated and displayed for general informational purposes only. Please verify independently before use.


  
Dominant Market Leader with a Wide Moat: Fanuc is a global leader in factory automation, holding significant market share in CNC systems (estimated at 65%) and industrial robots. Its competitive advantages are rooted in technological prowess, a reputation for reliability, high switching costs for customers, and an extensive global service network.
  
Poised to Capitalize on Secular Growth in Automation: The company is well-positioned to benefit from long-term structural tailwinds, including rising labor costs, skilled labor shortages, reshoring of manufacturing, and increased demand for automation in emerging sectors like electric vehicle (EV) production and electronics.
  
Cyclical Headwinds and Competitive Intensity Present Risks: Fanuc's financial performance is closely tied to global capital expenditure cycles, making it susceptible to economic downturns. The factory automation market is also highly competitive, with major players like ABB, Yaskawa, and Siemens vying for market share, which can pressure pricing and margins.
This content is AI-generated and displayed for general informational purposes only. Please verify independently before use.

Japanese Equity Specialist, Ortus Advisors

Andrew Jackson

Japanese Equity Specialist

Ortus Advisors

Thematic (Sector/Industry)

<ul>
<li>Can expect more from the likes of Rakus Co Ltd, Shift Inc, NEC Corp and Fujitsu Ltd which all traded well yesterday on the rotation away from frontline AI plays.</li>
<li>It would make sense to see interest in physical AI FA plays such as Yaskawa Electric, Mitsubishi Electric, Keyence Corp and Fanuc Corp as alternative exposure to the AI theme.</li>
<li>The power semis such as Fuji Electric, ROHM Co Ltd and Renesas Electronics should hold up after a strong day for the sector in the US.</li>
</ul>


Can expect more from the likes of Rakus Co Ltd, Shift Inc, NEC Corp and Fujitsu Ltd which all traded well yesterday on the rotation away from frontline AI plays.
It would make sense to see interest in physical AI FA plays such as Yaskawa Electric, Mitsubishi Electric, Keyence Corp and Fanuc Corp as alternative exposure to the AI theme.
The power semis such as Fuji Electric, ROHM Co Ltd and Renesas Electronics should hold up after a strong day for the sector in the US.


Japan Morning Connection: Physical AI FA Plays May Draw Fresh Interest as Alternative AI Exposure

Japan

FANUC CORPORATION manufactures factory automation (FA) systems and equipments, and robots. The Company's products include computerized numerically-controlled (CNC) equipment, servo motors, laser systems, industrial robots, wire-cut electric discharge machines, and CNC drill.  Fanuc participates in a joint venture with General Electric in the FA field.

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Fanuc Corp (6954 JP)

Curator's Cut: Brokering Records, Race to SpaceX & The Rise of Physical AI

This Curator’s Cut highlights windfall for brokers amidst market volatility, index rule changes for megacap IPOs, and prospects for physical AI....

Pranav Rao

Nikkei 225 Index Rebalance: NRI, Ryohin Keikaku IN; Nippon Paper, DIC OUT; Fast Retailing Capped

Nomura Research Institute and Ryohin Keikaku replace Nippon Paper and DIC in the Nikkei 225. Fast Retailing will be capped (and probably again in...

Brian Freitas

Fanuc (6954 JP): Sales Strong, Margins Slipping

The stock price has dropped 12% in two weeks, suggesting a rebound as the yen backs off recent gains. But profit guidance has been cut while sales...

Scott Foster

Primer: Fanuc Corp (6954 JP) - Dec 2025

Dominant Market Leader with a Wide Moat: Fanuc is a global leader in factory automation, holding significant market share in CNC systems...

αSK Primers

Japan Morning Connection: Physical AI FA Plays May Draw Fresh Interest as Alternative AI Exposure

Expect a continuation of the shift away from frontline AI plays. Interest in physical AI FA plays may see an increase as alternative exposure to...

Andrew Jackson

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52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Curator's Cut: Brokering Records, Race to SpaceX & The Rise of Physical AI

​This Curator’s Cut highlights windfall for brokers amidst market volatility, index rule changes for megacap IPOs, and prospects for physical AI....

Pranav Rao

Nikkei 225 Index Rebalance: NRI, Ryohin Keikaku IN; Nippon Paper, DIC OUT; Fast Retailing Capped

Nomura Research Institute and Ryohin Keikaku replace Nippon Paper and DIC in the Nikkei 225. Fast Retailing will be capped (and probably again in...

Brian Freitas

Fanuc (6954 JP): Sales Strong, Margins Slipping

The stock price has dropped 12% in two weeks, suggesting a rebound as the yen backs off recent gains. But profit guidance has been cut while sales...

Scott Foster

Primer: Fanuc Corp (6954 JP) - Dec 2025

Dominant Market Leader with a Wide Moat: Fanuc is a global leader in factory automation, holding significant market share in CNC systems...

αSK Primers

Japan Morning Connection: Physical AI FA Plays May Draw Fresh Interest as Alternative AI Exposure

Expect a continuation of the shift away from frontline AI plays. Interest in physical AI FA plays may see an increase as alternative exposure to...

Andrew Jackson

This Curator’s Cut highlights windfall for brokers amidst market volatility, index rule changes for megacap IPOs, and prospects for physical AI....