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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Thematic (Sector/Industry)

<p>Consumer Staples are a good inflation hedge, but only if they can pass on the increase in raw material costs to end consumers. In a scenario of high unemployment and collapsing demand this may not always be possible.</p><p>We have taken a look at the change in short interest on Asian consumer staples names across Hong Kong, Korea, Taiwan and Japan to identify stocks that the market is betting on and against.</p><p>There is a fair bit of variability among the HK and Taiwan stocks, short interest has been broadly lower in Korea and has been plummeting in Japan. Investors can use the data as one of the inputs in identifying stocks that could benefit from an increase in inflation in the near/medium term.</p>

Consumer Staples are a good inflation hedge, but only if they can pass on the increase in raw material costs to end consumers. In a scenario of high unemployment and collapsing demand this may not always be possible.We have taken a look at the change in short interest on Asian consumer staples names across Hong Kong, Korea, Taiwan and Japan to identify stocks that the market is betting on and against.There is a fair bit of variability among the HK and Taiwan stocks, short interest has been broadly lower in Korea and has been plummeting in Japan. Investors can use the data as one of the inputs in identifying stocks that could benefit from an increase in inflation in the near/medium term.

Asian Consumer Staples - Inflation Hedge?

'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.

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/127/809/original/2020-04-14_04-54-14.png?1586807683" class="editor-image img-responsive" data-smartkarma-image-id="127809"></figure><div class="content-caption">Source • Japan Analytics</div><p><strong>A CLEARER VISION</strong> - Softbank last made an earnings forecast in December 2010; however, the startling losses at the Vision Fund have prompted them to be more forthcoming, perhaps not entirely unrelated to their buyback programme.  The revisions amount to a cut of 3% to forecast for annual operating profit and net income for the market overall. We will leave the implications for the NAV discount to <a href="https://www.smartkarma.com/profiles/kirk-boodry" target="_blank" data-smartkarma-citation="accounts:1920" rel="noopener">Kirk Boodry</a> and others to fill in; however, we would note that the more traditional revised BPS is now 1.26. </p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/127/781/original/2020-04-13_18-22-38.png?1586769778" class="editor-image img-responsive" data-smartkarma-image-id="127781"></figure><div class="content-caption">Source • SNA</div><p><strong>HOKKAIDO'S SECOND WAVE</strong> - Hokkaido has just reimposed a prefectural-level emergency having seen its second wave of infections after lifting restrictions on 19th March. Ten prefecture are imposing various degrees of quasi-lockdowns after Ishikawa-ken followed Aichi's example yesterday.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/127/816/original/File%202020-04-14%207%2027%2032.jpeg?1586816887" class="editor-image img-responsive" data-smartkarma-image-id="127816"></figure><div class="content-caption">Source • TMG <figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/127/818/original/IMG_1317.jpg?1586817094" class="editor-image img-responsive" data-smartkarma-image-id="127818"></figure>
</div><div class="content-caption">Source • NHK</div><p><strong>MONDAY CASE COUNT</strong> - Tokyo saw just 91 new confirmed cases yesterday; however, Monday's tend to be quieter days due to a lower amount of testing. The rest of the country saw 125 new cases - only three prefectures saw more than ten new cases.</p><p><strong>NOT SO FULL DISCLOSURE</strong> - Japan's FSA is planning to postpone the deadline for submitting yuho annual reports for listed companies closing in March for three months, until the end of September, given the impact of the COVID-19.  The unaudited short-form kessan tanshin statements will continue, however, certain items including data on shareholdings will be delayed. Annual General Meetings for March year-end companies that generally take place in June will also have to be postponed.</p><p>In the <strong>DETAIL</strong> below, we shall review the large-cap results, revisions and initial forecast announcements made yesterday. The positive/neutral/negative balance for all 63 results was 29:9:25; for the 27 revisions/forecasts, the split was 11:1:15. </p>

Source • Japan AnalyticsA CLEARER VISION - Softbank last made an earnings forecast in December 2010; however, the startling losses at the Vision Fund have prompted them to be more forthcoming, perhaps not entirely unrelated to their buyback programme.  The revisions amount to a cut of 3% to forecast for annual operating profit and net income for the market overall. We will leave the implications for the NAV discount to Kirk Boodry and others to fill in; however, we would note that the more traditional revised BPS is now 1.26. Source • SNAHOKKAIDO'S SECOND WAVE - Hokkaido has just reimposed a prefectural-level emergency having seen its second wave of infections after lifting restrictions on 19th March. Ten prefecture are imposing various degrees of quasi-lockdowns after Ishikawa-ken followed Aichi's example yesterday.Source • TMG 
Source • NHKMONDAY CASE COUNT - Tokyo saw just 91 new confirmed cases yesterday; however, Monday's tend to be quieter days due to a lower amount of testing. The rest of the country saw 125 new cases - only three prefectures saw more than ten new cases.NOT SO FULL DISCLOSURE - Japan's FSA is planning to postpone the deadline for submitting yuho annual reports for listed companies closing in March for three months, until the end of September, given the impact of the COVID-19.  The unaudited short-form kessan tanshin statements will continue, however, certain items including data on shareholdings will be delayed. Annual General Meetings for March year-end companies that generally take place in June will also have to be postponed.In the DETAIL below, we shall review the large-cap results, revisions and initial forecast announcements made yesterday. The positive/neutral/negative balance for all 63 results was 29:9:25; for the 27 revisions/forecasts, the split was 11:1:15. 

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

<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

Expert on Japan Retail and Consumer Markets, JapanConsuming

Michael Causton

Expert on Japan Retail and Consumer Markets

Real Insight on Japanese Consumer Markets

JapanConsuming

JapanConsuming is a specialist research firm producing intelligence on Japanese retail and consumer markets. Founded in 2000, JapanConsuming has become the leading provider of insights on Japanese retailers and consumer trends to retailers, brands, government agencies and investors. As well as a highly regarded monthly report on the market, JapanConsuming produces in-depth reports on retail sectors, seminars on key trends and telephone consulting to investors on trends and retailers.

JapanConsuming was founded by Michael Causton and Roy Larke. 

<p><strong>The following is an in-depth review of the drugstore sector and the impact of the Cocokara Fine and Matsukiyo merger on other key drugstore stocks, highlighting the likely winners and losers in the next 3-5 years.</strong></p>
<p>The drugstore sector is about to consolidate more rapidly than at any time in its history, with big implications for the cosmetics, medicines, food and toiletries industries and, among retailers, worries for supermarkets and convenience stores.</p>
<p>The imminent merger of <a href="https://www.smartkarma.com/entities/matsumotokiyoshi-holdings-co" target="_blank" data-smartkarma-citation="entities:2259:1" rel="noopener">Matsumotokiyoshi Holdings Co (3088 JP)</a> and <a href="https://www.smartkarma.com/entities/cocokara-fine-inc" target="_blank" data-smartkarma-citation="entities:15447:1" rel="noopener">Cocokara Fine (3098 JP)</a> will trigger a wave of other mergers among competitors big and small, creating a modernised sector with huge buying power across many product categories.</p>
<p>In food, in particular, this buying power is already causing headaches for retailers in regions like Kyushu where drugstore discounters are strong and this trend will play out across Japan over the next few years.  While the drugstore market may not grow, its leaders will.</p>

The following is an in-depth review of the drugstore sector and the impact of the Cocokara Fine and Matsukiyo merger on other key drugstore stocks, highlighting the likely winners and losers in the next 3-5 years.
The drugstore sector is about to consolidate more rapidly than at any time in its history, with big implications for the cosmetics, medicines, food and toiletries industries and, among retailers, worries for supermarkets and convenience stores.
The imminent merger of Matsumotokiyoshi Holdings Co (3088 JP) and Cocokara Fine (3098 JP) will trigger a wave of other mergers among competitors big and small, creating a modernised sector with huge buying power across many product categories.
In food, in particular, this buying power is already causing headaches for retailers in regions like Kyushu where drugstore discounters are strong and this trend will play out across Japan over the next few years.  While the drugstore market may not grow, its leaders will.

Japanese Drugstores: With Maturity Comes Marriage

<p>What statistics are available suggest that Japan lags behind China, USA and the UK in terms of e-commerce penetration but this position overlooks the single-minded shift of retailing to integrate e-commerce with traditional retailing.</p>
<p>Japan still has much to offer customers in the high street and these physical stores are now being heavily supplemented through online channels. Already we’re seeing the role of some stores shift towards showrooms making management more efficient and meaningful.</p>
<p>Japan is set to see the e-commerce sector as big as 20% of retail sales by 2024 and many of the operational problems holding online retail back globally, such as last mile fulfilment, could well be solved first in Japan.</p>
<p>Amazon, Rakuten and Softbank/Z/Zozo dominate the market and this dominance looks set to continue but other players are growing too with some retailers also finally working out how to make e-commerce work.</p>

What statistics are available suggest that Japan lags behind China, USA and the UK in terms of e-commerce penetration but this position overlooks the single-minded shift of retailing to integrate e-commerce with traditional retailing.
Japan still has much to offer customers in the high street and these physical stores are now being heavily supplemented through online channels. Already we’re seeing the role of some stores shift towards showrooms making management more efficient and meaningful.
Japan is set to see the e-commerce sector as big as 20% of retail sales by 2024 and many of the operational problems holding online retail back globally, such as last mile fulfilment, could well be solved first in Japan.
Amazon, Rakuten and Softbank/Z/Zozo dominate the market and this dominance looks set to continue but other players are growing too with some retailers also finally working out how to make e-commerce work.

Japanese E-Commerce Review 2020: Softbank/Z, Rakuten and Amazon to Dominate Further

Japan

AEON CO., LTD. operates general merchandise stores, supermarkets, and convenience stores throughout Japan. The Company is also engaged in women's and casual clothing store business, development business of commercial property, and financing service through the subsidiaries.

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Aeon Co Ltd (8267 JP)

Asian Consumer Staples - Inflation Hedge?

Consumer Staples are a good inflation hedge, but only if they can pass on the increase in raw material costs to end consumers. In a scenario of...

Brian Freitas

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

A CLEARER VISION - Softbank last made an earnings forecast in December 2010; however, the startling losses at the Vision Fund have prompted them to...

Campbell Gunn

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

CONTAINMENT 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...

Campbell Gunn

Japanese Drugstores: With Maturity Comes Marriage

The following is an in-depth review of the drugstore sector and the impact of the Cocokara Fine and Matsukiyo merger on other key drugstore stocks,...

Michael Causton

Japanese E-Commerce Review 2020: Softbank/Z, Rakuten and Amazon to Dominate Further

What statistics are available suggest that Japan lags behind China, USA and the UK in terms of e-commerce penetration but this position overlooks...

Michael Causton

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