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

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/light-wonder-inc" target="_blank" data-smartkarma-citation="entities:36929:1" rel="noopener">Light &amp; Wonder (LNW US)</a>/ <a href="https://www.smartkarma.com/entities/light-wonder-inc-7e7d040f-e811-4fb9-9710-796a39af299e" target="_blank" data-smartkarma-citation="entities:40171:1" rel="noopener">Light &amp; Wonder (LNW AU)</a> replaced <a href="https://www.smartkarma.com/entities/united-malt-group-ltd" target="_blank" data-smartkarma-citation="entities:29116:1" rel="noopener">United Malt Group Ltd (UMG AU)</a> in the <a href="https://www.smartkarma.com/entities/s-p-asx-200" target="_blank" data-smartkarma-citation="entities:22901:1" rel="noopener">S&amp;P/ASX 200 (AS51 INDEX)</a> last week.</li>
<li>
<a href="https://www.smartkarma.com/entities/newcrest-mining-ltd" target="_blank" data-smartkarma-citation="entities:691:1" rel="noopener">Newcrest Mining (NCM AU)</a> stops trading this week and should be replaced by <a href="https://www.smartkarma.com/entities/newmont-mining-corp" target="_blank" data-smartkarma-citation="entities:14503:1" rel="noopener">Newmont Mining (NEM US)</a> CDIs in the ASX indices.</li>
<li>Another week of ETF outflows for China with the largest outflows from trackers benchmarked to the CSI 1000 Index.</li>
</ul>



Light &amp; Wonder (LNW US)/ Light &amp; Wonder (LNW AU) replaced United Malt Group Ltd (UMG AU) in the S&amp;P/ASX 200 (AS51 INDEX) last week.

Newcrest Mining (NCM AU) stops trading this week and should be replaced by Newmont Mining (NEM US) CDIs in the ASX indices.
Another week of ETF outflows for China with the largest outflows from trackers benchmarked to the CSI 1000 Index.


Index Rebalance & ETF Flow Recap: NKY, ASX, Liontown, J&T Express, JP/IN Positioning, IndusInd Bank

<ul>
<li>The review period for 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> March rebalance ends end January. There could be three changes at the rebalance with sector balance in focus.</li>
<li>Depending on the changes, passive trackers will need to buy between 6-28x ADV (11-50% of real float) on the inclusions and sell between 2.8-44x ADV on the deletions.</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> could be capped at 11% of the index weight and there will be buying in <a href="https://www.smartkarma.com/entities/nitori-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:20386:1" rel="noopener">Nitori Holdings (9843 JP)</a> due to the stepwise addition.</li>
</ul>


The review period for the Nikkei 225 (NKY INDEX) March rebalance ends end January. There could be three changes at the rebalance with sector balance in focus.
Depending on the changes, passive trackers will need to buy between 6-28x ADV (11-50% of real float) on the inclusions and sell between 2.8-44x ADV on the deletions.

Fast Retailing (9983 JP) could be capped at 11% of the index weight and there will be buying in Nitori Holdings (9843 JP) due to the stepwise addition.


Nikkei 225 Index Rebalance Preview (Mar 2024): Ranking, Capping, Funding & Other Changes

Equity Analyst, LightStream Research

Shifara Samsudeen, ACMA, CGMA

Equity Analyst

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.

Equity Bottom-Up

<ul>
<li>Nihon M&amp;A reported 1QFY03/2024 results on Friday. Both revenue and OP decreased 9.1% and 52.5% YoY to ¥8.2bn (vs consensus ¥9.8bn) and ¥1.7bn (vs consensus ¥3.6bn) respectively.</li>
<li>M&amp;A sales decreased yet again in 1Q as the company is struggling to improve revenue per transaction despite there being an increase in the no. of transactions.</li>
<li>We think the company may not be able to achieve full-year target given declining per transaction revenues and falling other businesses.</li>
</ul>


Nihon M&amp;A reported 1QFY03/2024 results on Friday. Both revenue and OP decreased 9.1% and 52.5% YoY to ¥8.2bn (vs consensus ¥9.8bn) and ¥1.7bn (vs consensus ¥3.6bn) respectively.
M&amp;A sales decreased yet again in 1Q as the company is struggling to improve revenue per transaction despite there being an increase in the no. of transactions.
We think the company may not be able to achieve full-year target given declining per transaction revenues and falling other businesses.


Nihon M&A: Earnings Miss, No Indication of a Business Turnaround Yet

Japan Specialist

Mark Chadwick

Thematic (Sector/Industry)

<ul>
<li>The benchmark index Nikkei 225 closed the week at 32,304 – 87 points lower than the week before. Blame it on the global tech sell-off</li>
<li>Nidec reported Q1 earnings that trounced analyst expectations – mine included. The stock rose 13% over the week</li>
<li>BayCurrent reported Q1 earnings that missed Street expectations. As Japan earnings season moves into full gear, expect more single stock volatility</li>
</ul>


The benchmark index Nikkei 225 closed the week at 32,304 – 87 points lower than the week before. Blame it on the global tech sell-off
Nidec reported Q1 earnings that trounced analyst expectations – mine included. The stock rose 13% over the week
BayCurrent reported Q1 earnings that missed Street expectations. As Japan earnings season moves into full gear, expect more single stock volatility


Japan Weekly | Nidec, Fast Retailing, BayCurrent

<ul>
<li>OVERSEAS.  SPX hit 52W highs as Yellen sees no US Recession;  Rates fall on "inflation behind us" narrative; Global HF unwind bearish US positions; EV WARS as Ford Slashes prices.  </li>
<li>JAPAN.  NKY Futures -0.2% vs Cash; USDJPY 138.7%; Japan Back after Marine Day Holidays to lower US rates, stronger yen, Weaker China, and Tech bid; Blackrock lifts Japan stock outlook </li>
<li>NUGGET.  JAL(9201) Double Winner(Margins+Emmissions) with Fleet Upgrade. Share price has run, but strong tailwinds on demand and operational efficiency. Watch for pullback to pick up.</li>
</ul>


OVERSEAS.  SPX hit 52W highs as Yellen sees no US Recession;  Rates fall on "inflation behind us" narrative; Global HF unwind bearish US positions; EV WARS as Ford Slashes prices.  
JAPAN.  NKY Futures -0.2% vs Cash; USDJPY 138.7%; Japan Back after Marine Day Holidays to lower US rates, stronger yen, Weaker China, and Tech bid; Blackrock lifts Japan stock outlook 
NUGGET.  JAL(9201) Double Winner(Margins+Emmissions) with Fleet Upgrade. Share price has run, but strong tailwinds on demand and operational efficiency. Watch for pullback to pick up.


Ohayo Japan|Equities Cruise on No Recession Narrative; NUGGET: JAL(9201) A Double Winner

Japan

Baycurrent Consulting , Inc. offers comprehensive consulting services in a wide variety of industries. The company's main focus areas are business strategy consulting, IT consulting, and IT integration.

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BayCurrent Consulting (6532 JP)

Index Rebalance & ETF Flow Recap: NKY, ASX, Liontown, J&T Express, JP/IN Positioning, IndusInd Bank

This recap highlights Insights covering Asian index rebalances (announcements/ forecasts/ IPO Fast Entry/ M&A driven changes). We also highlight...

Brian Freitas

Nikkei 225 Index Rebalance Preview (Mar 2024): Ranking, Capping, Funding & Other Changes

There could be 3 changes in March + Fast Retailing capping. Stepwise inclusion of Nitori too. Socionext could be an add if it splits its stock. As...

Brian Freitas

Nihon M&A: Earnings Miss, No Indication of a Business Turnaround Yet

Nihon M&A's earnings missed consensus. The company is struggling to improve its falling per transaction revenue and contain costs, and it seems...

Shifara Samsudeen, ACMA, CGMA

Japan Weekly | Nidec, Fast Retailing, BayCurrent

The benchmark index Nikkei 225 closed the week at 32,304 – 87 points lower than the week before. Blame it on the global tech sell-off. We highlight...

Mark Chadwick

Ohayo Japan|Equities Cruise on No Recession Narrative; NUGGET: JAL(9201) A Double Winner

SPX hit 52W highs as no recession/inflation behind us narrative dominates; NKY Futures -0.2% vs Cash; USDJPY 138.7%; Japan to lower US rates,...

Mark Chadwick

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