Chief Economist & Political Strategist, CrossASEAN Research

Prasenjit K. Basu

Chief Economist & Political Strategist

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Thematic (Sector/Industry)

<p>The remarkable political pact (MoU) signed between PM Ismail Sabri Yaakob and 4 leaders of the constituent parties of the PH opposition alliance ensures political and economic-policy stability until the end of July 2022. PH gained an assurance of political reforms (an anti-defection law, lowering the voting age to 18, greater representation in parliamentary committees and equal funding for opposition and ruling-party MPs) in exchange for its conditional pledge not to dislodge the government for nearly 11 months, and support the Budget for 2022. </p><p>The pact does not contain any steps to counter the gerrymandering of constituencies that UMNO and BN have effected over the past five decades. And it says nothing about policies other than purely budgetary matters. The UMNO-PAS-Bersatu alliance (a pure Malay-Muslim ruling group) has since moved swiftly to exploit those loopholes -- by advancing a series of discriminatory steps that deepen the racist underpinnings of Malaysia's constitution (negotiated by the departing British in 1948-57). A key policy being advanced requires all freight-forwarding and logistics companies to be 51% Bumiputera owned by end-2021; this will have a severely negative impact on non-Muslim-owned companies big and small (with most conglomerates having a freight-forwarding unit, and numerous small-businesses being based on trucking and logistics).</p><p>The 12th Malaysia Plan (tabled last month) includes a policy requiring that all Bumiputera companies only be sold to Bumiputeras. And the infamous RUU 355 legislation (enhancing the powers of Shariah Courts over criminal cases, and allowing them to use traditional Islamic punishments) is progressing rapidly under this government.  These 3 legislations may endear the UMNO-PAS alliance to Malays nationally. They are aimed at putting PH's leader Anwar Ibrahim on the spot, as (despite founding the Islamic students' movement ABIM in the 1970s) Anwar leads an explicitly multi-racial party (at the head of a genuinely multi-racial alliance) and has eloquently advocated a race-neutral Malaysia over the past decade. More enduringly, these policies (unless reversed by a future PH government) risk permanently alienating much of Malaysia's business community (who will then choose to invest outside Malaysia rather than within it, turning Malaysia increasingly into an economy of generally-inefficient GLCs and foreign-owned MNCs). Despite the appearance of policy stability from this pact, the policies of this government are permanently handicapping Malaysia and threaten its longer-term economic viability.          </p>

The remarkable political pact (MoU) signed between PM Ismail Sabri Yaakob and 4 leaders of the constituent parties of the PH opposition alliance ensures political and economic-policy stability until the end of July 2022. PH gained an assurance of political reforms (an anti-defection law, lowering the voting age to 18, greater representation in parliamentary committees and equal funding for opposition and ruling-party MPs) in exchange for its conditional pledge not to dislodge the government for nearly 11 months, and support the Budget for 2022. The pact does not contain any steps to counter the gerrymandering of constituencies that UMNO and BN have effected over the past five decades. And it says nothing about policies other than purely budgetary matters. The UMNO-PAS-Bersatu alliance (a pure Malay-Muslim ruling group) has since moved swiftly to exploit those loopholes -- by advancing a series of discriminatory steps that deepen the racist underpinnings of Malaysia's constitution (negotiated by the departing British in 1948-57). A key policy being advanced requires all freight-forwarding and logistics companies to be 51% Bumiputera owned by end-2021; this will have a severely negative impact on non-Muslim-owned companies big and small (with most conglomerates having a freight-forwarding unit, and numerous small-businesses being based on trucking and logistics).The 12th Malaysia Plan (tabled last month) includes a policy requiring that all Bumiputera companies only be sold to Bumiputeras. And the infamous RUU 355 legislation (enhancing the powers of Shariah Courts over criminal cases, and allowing them to use traditional Islamic punishments) is progressing rapidly under this government.  These 3 legislations may endear the UMNO-PAS alliance to Malays nationally. They are aimed at putting PH's leader Anwar Ibrahim on the spot, as (despite founding the Islamic students' movement ABIM in the 1970s) Anwar leads an explicitly multi-racial party (at the head of a genuinely multi-racial alliance) and has eloquently advocated a race-neutral Malaysia over the past decade. More enduringly, these policies (unless reversed by a future PH government) risk permanently alienating much of Malaysia's business community (who will then choose to invest outside Malaysia rather than within it, turning Malaysia increasingly into an economy of generally-inefficient GLCs and foreign-owned MNCs). Despite the appearance of policy stability from this pact, the policies of this government are permanently handicapping Malaysia and threaten its longer-term economic viability.          

Malaysia: Stability Paves Way for Better Policy; UMNO-PAS Long-Term Challenge

'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.

<p style="text-align: center;"><strong>• THE POST-COVID ROTATION •</strong></p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/191/288/original/2021-02-28_08-38-14.png?1614469105" class="editor-image img-responsive" data-smartkarma-image-id="191288"></figure><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/191/290/original/2021-02-28_08-57-32.png?1614470265" class="editor-image img-responsive" data-smartkarma-image-id="191290"></figure></section></section><section class="figure"><div style="text-align: center;" class="content-caption"> Source for all charts &amp; tables: Japan Analytics</div></section><p><strong>THE 2021 ROTATION ACCELERATES</strong> - As we noted in <a href="https://www.smartkarma.com/insights/japan-the-post-covid-rotation-from-growth-to-value-begins-02-05-results-revisions-update" target="_blank" data-smartkarma-citation="insights:47877" rel="noopener">The Post-COVID Rotation from Growth to Value Begins</a>, the Japanese equity market has been led by overvalued and overvalued for most of the last year overbought high-quality growth companies in the <strong>Technology Hardware</strong>, <strong>Electrical Equipment</strong>, <strong>Internet</strong>, and <strong>Healthcare</strong> Sectors. These companies were deemed to be 'COVID-resistant' and were consistently well-bid regardless of price. The stocks leading this 'charge' were <a href="https://www.smartkarma.com/entities/m3-inc" target="_blank" data-smartkarma-citation="entities:13316:1" rel="noopener">M3 (2413 JP),</a><a href="https://www.smartkarma.com/entities/lasertec-corp" target="_blank" data-smartkarma-citation="entities:4126:1" rel="noopener">Lasertec (6920 JP)</a>, <a href="https://www.smartkarma.com/entities/monotaro-co-ltd" target="_blank" data-smartkarma-citation="entities:15441:1" rel="noopener">MonotaRO (3064 JP)</a>, <a href="https://www.smartkarma.com/entities/chugai-pharmaceutical-co-ltd" target="_blank" data-smartkarma-citation="entities:4489:1" rel="noopener">Chugai Pharmaceutical (4519 JP)</a>, and <a href="https://www.smartkarma.com/entities/nidec-corp" target="_blank" data-smartkarma-citation="entities:7245:1" rel="noopener">Nidec (6594 JP)</a>, while the only cyclical Sector that has seen a major recovery was Energy. Meanwhile, shares in domestically-orientated Sectors and companies heavily exposed to COVID-related delines in business activity languished despite valuations reaching ten or twenty-year lows. </p><p><strong>PEAKED?</strong> - Over the last twenty trading days during which TOPIX reached 1,974.99. 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> breached 30,000, many of these market leaders have seen a significant correction, while the market has rotated into domestic, cyclical, and financial Sectors - as illustrated by our Sector Relative Price Score timelines in the chart above. In the<strong> DETAIL</strong> Section below, we will review the current market technicals after Friday's 4% N225 decline and look at the leading stocks on both 'sides' of this rotation trade.</p>

• THE POST-COVID ROTATION • Source for all charts &amp; tables: Japan AnalyticsTHE 2021 ROTATION ACCELERATES - As we noted in The Post-COVID Rotation from Growth to Value Begins, the Japanese equity market has been led by overvalued and overvalued for most of the last year overbought high-quality growth companies in the Technology Hardware, Electrical Equipment, Internet, and Healthcare Sectors. These companies were deemed to be 'COVID-resistant' and were consistently well-bid regardless of price. The stocks leading this 'charge' were M3 (2413 JP),Lasertec (6920 JP), MonotaRO (3064 JP), Chugai Pharmaceutical (4519 JP), and Nidec (6594 JP), while the only cyclical Sector that has seen a major recovery was Energy. Meanwhile, shares in domestically-orientated Sectors and companies heavily exposed to COVID-related delines in business activity languished despite valuations reaching ten or twenty-year lows. PEAKED? - Over the last twenty trading days during which TOPIX reached 1,974.99. The Nikkei 225 (NKY INDEX) breached 30,000, many of these market leaders have seen a significant correction, while the market has rotated into domestic, cyclical, and financial Sectors - as illustrated by our Sector Relative Price Score timelines in the chart above. In the DETAIL Section below, we will review the current market technicals after Friday's 4% N225 decline and look at the leading stocks on both 'sides' of this rotation trade.

🇯🇵 JAPAN • The Post-COVID Rotation Accelerates

<div><p style="text-align: center;"><strong>• BEST &amp; WORST •</strong></p></div><div>
<p>Our best and worst pair from Monday's announcements is <a href="https://www.smartkarma.com/entities/weathernews-inc" target="_blank" data-smartkarma-citation="entities:16991:1" rel="noopener">Weathernews (4825 JP)</a> and <a href="https://www.smartkarma.com/entities/coca-cola-bottlers-japan" target="_blank" data-smartkarma-citation="entities:20051:1" rel="noopener">Coca Cola Bottlers Japan (2579 JP)</a>. </p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/163/489/original/2020-10-06_05-34-42.png?1601930214" class="editor-image img-responsive" data-smartkarma-image-id="163489"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/163/490/original/2020-10-06_05-35-26.png?1601930263" class="editor-image img-responsive" data-smartkarma-image-id="163490"></figure><div class="content-caption">Source for all charts &amp; tables: Japan Analytics</div>
<div><p>DAILY STATS</p></div>
<hr>
<div><p style="text-align: center;"><strong>12 Quarterly Results</strong></p></div>
<div><ul style="list-style-type: disc;">
<li><p><strong>Results Score:</strong> 33% Positive / 8% Neutral / 58% Negative</p></li>
<li><p><strong>Average Results Score Change:</strong> -2.0 points</p></li>
<li><p><strong>Average % Change in Revenue:</strong> -12.5% Quarter YoY / -5.1% Rolling TTM YoY </p></li>
<li><p><strong>Average Operating Profit Margin Change:</strong> -3.3ppt</p></li>
<li><p><strong>Percentage Making Quarterly Losses:</strong> 25%</p></li>
</ul></div>
<hr>
<div><p style="text-align: center;"><strong>10 Annual • 5 Interim Forecasts/Revisions</strong></p></div>
<div><ul style="list-style-type: disc;">
<li><p><strong>Annual Forecast/Revision Score:</strong> 50% Positive /20% Neutral / 30% Negative</p></li>
<li><p><strong>Interim Forecast/Revision Score Change:</strong> 20% Positive / 0% Neutral / 80% Negative</p></li>
<li><p><strong>Average Forecast/Revision Score Change:</strong> -5.1 point</p></li>
</ul></div>
</div>

• BEST &amp; WORST •
Our best and worst pair from Monday's announcements is Weathernews (4825 JP) and Coca Cola Bottlers Japan (2579 JP). 
Source for all charts &amp; tables: Japan Analytics
DAILY STATS

12 Quarterly Results

Results Score: 33% Positive / 8% Neutral / 58% Negative
Average Results Score Change: -2.0 points
Average % Change in Revenue: -12.5% Quarter YoY / -5.1% Rolling TTM YoY 
Average Operating Profit Margin Change: -3.3ppt
Percentage Making Quarterly Losses: 25%


10 Annual • 5 Interim Forecasts/Revisions

Annual Forecast/Revision Score: 50% Positive /20% Neutral / 30% Negative
Interim Forecast/Revision Score Change: 20% Positive / 0% Neutral / 80% Negative
Average Forecast/Revision Score Change: -5.1 point



🇯🇵 JAPAN • Results & Revisions - 10/​​​​​​05 Fuji, Weathernews, Create SD, Daikin, Coca Cola Japan

<div><p style="text-align: center;"><strong>•BEST &amp; WORST 4th AUGUST •</strong></p></div><div>
<p>The 'best' and 'worst' from yesterday's large-cap announcements came from <a href="https://www.smartkarma.com/entities/itochu-techno-solutions-corp" target="_blank" data-smartkarma-citation="entities:2431:1" rel="noopener">Itochu Techno Solutions (4739 JP)</a> and <a href="https://www.smartkarma.com/entities/nok-corp" target="_blank" data-smartkarma-citation="entities:2980:1" rel="noopener">NOK Corp (7240 JP)</a>, respectively - both mostly driven by forecasts.  More extensive coverage follows in the DETAIL section below.</p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/150/543/original/2020-08-05_06-36-25.png?1596577023" class="editor-image img-responsive" data-smartkarma-image-id="150543"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/150/530/original/2020-08-05_05-52-12.png?1596574370" class="editor-image img-responsive" data-smartkarma-image-id="150530"></figure><div class="content-caption">Source • Japan Analytics</div>
<hr>
</div><div>
<p style="text-align: center;"><strong>DAILY STATS</strong></p>
<hr>
</div><div><p><strong>PERCENTAGES</strong> - 74% of quarterly results,  80% of annual forecasts/revisions and 73% of interim forecasts have negative Scores and 33% of companies reporting lost money for the quarter.</p></div><hr><div><p style="text-align: center;"><strong>127 Quarterly Results</strong></p></div><div><ul>
<li>
<strong>Results Score:</strong> 24% Positive / 2% Neutral / 74% Negative</li>
<li>
<strong>Average Results Score Change: </strong>-4.5 points</li>
<li>
<strong>Average % Change in Revenue: </strong>-13.4% Quarter YoY / -3.9% Rolling TTM YoY </li>
<li>
<strong>Average Operating Profit Margin Change:</strong> -1.8 ppt</li>
<li>
<strong>Percentage Making Quarterly Losses:</strong> 33%</li>
</ul></div><hr><div><p style="text-align: center;"><br><strong>59 Annual • 33 Interim Forecasts/Revisions</strong></p></div><div><ul>
<li>
<strong>Annual Forecast/Revision Score:</strong> 17% Positive / 3% Neutral / 80% Negative</li>
<li>
<strong>Interim Forecast/Revision Score Change:</strong> 24% Positive / 3% Neutral / 73% Negative</li>
<li>
<strong>Average Forecast/Revision Score Change:</strong> -9.7 points</li>
</ul></div>

•BEST &amp; WORST 4th AUGUST •
The 'best' and 'worst' from yesterday's large-cap announcements came from Itochu Techno Solutions (4739 JP) and NOK Corp (7240 JP), respectively - both mostly driven by forecasts.  More extensive coverage follows in the DETAIL section below.
Source • Japan Analytics


DAILY STATS

PERCENTAGES - 74% of quarterly results,  80% of annual forecasts/revisions and 73% of interim forecasts have negative Scores and 33% of companies reporting lost money for the quarter.127 Quarterly Results

Results Score: 24% Positive / 2% Neutral / 74% Negative

Average Results Score Change: -4.5 points

Average % Change in Revenue: -13.4% Quarter YoY / -3.9% Rolling TTM YoY 

Average Operating Profit Margin Change: -1.8 ppt

Percentage Making Quarterly Losses: 33%
 59 Annual • 33 Interim Forecasts/Revisions

Annual Forecast/Revision Score: 17% Positive / 3% Neutral / 80% Negative

Interim Forecast/Revision Score Change: 24% Positive / 3% Neutral / 73% Negative

Average Forecast/Revision Score Change: -9.7 points


🇯🇵 JAPAN • Results & Revisions 4th August - Sony, CTC, Kakaku.com, Daikin, Yamaha, Tokai Carbon

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/146/891/original/2020-07-20_11-11-13.png?1595211104" class="editor-image img-responsive" data-smartkarma-image-id="146891"></figure><div class="content-caption">Source • Japan Analytics</div><p><strong>THE 'HUNDRED DAYS WAR'</strong> - It is almost one hundred days since the equity markets began to discount the onset of COVID-19. Since the TOPIX closing low of 1,236.34 on 16th March, the index has recovered by 27%. However, it has only been in the last ten trading days that the number of new two-year share price highs and lows has consistently been in double-digits.  This month has seen 136 new two-year lows and 214 new two-year highs. Whatever the impact of COVID-19 on earnings, the market is very clearly signalling its preferences for COVID 'Heroes &amp; Villains'. In the <strong>DETAIL</strong> section below, we shall look at the leading large caps in both categories and suggest opportunities in each.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/146/894/original/2020-07-20_11-42-42.png?1595213322" class="editor-image img-responsive" data-smartkarma-image-id="146894"></figure><div class="content-caption">Source • Japan Analytics</div><p><strong>RELATIVE PRICE</strong> - We shall also conduct the same analysis using our Relative Price Score methodology. The July numbers are 469 Relative Price Score new lows and 229 new highs suggesting a high degree of market polarity as confirmed by the percentages of market value in Overbought and Oversold Stocks - which are both at twenty-year highs.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/146/895/original/2020-07-20_11-58-18.png?1595214235" class="editor-image img-responsive" data-smartkarma-image-id="146895"></figure><div class="content-caption">Source • Japan Analytics</div><p><strong>RESULTS DRIVER</strong> - We expect the number of absolute 'heroes and villains' to increase in the next two months as the COVID fallout on earnings is revealed, and will provide further updates as we progress. </p>

Source • Japan AnalyticsTHE 'HUNDRED DAYS WAR' - It is almost one hundred days since the equity markets began to discount the onset of COVID-19. Since the TOPIX closing low of 1,236.34 on 16th March, the index has recovered by 27%. However, it has only been in the last ten trading days that the number of new two-year share price highs and lows has consistently been in double-digits.  This month has seen 136 new two-year lows and 214 new two-year highs. Whatever the impact of COVID-19 on earnings, the market is very clearly signalling its preferences for COVID 'Heroes &amp; Villains'. In the DETAIL section below, we shall look at the leading large caps in both categories and suggest opportunities in each.Source • Japan AnalyticsRELATIVE PRICE - We shall also conduct the same analysis using our Relative Price Score methodology. The July numbers are 469 Relative Price Score new lows and 229 new highs suggesting a high degree of market polarity as confirmed by the percentages of market value in Overbought and Oversold Stocks - which are both at twenty-year highs.Source • Japan AnalyticsRESULTS DRIVER - We expect the number of absolute 'heroes and villains' to increase in the next two months as the COVID fallout on earnings is revealed, and will provide further updates as we progress. 

🇯🇵 JAPAN • The Hundred Days War - COVID Heroes & Villains

Japan

DAIKIN INDUSTRIES, LTD. manufactures air conditioning equipment for household and commercial use.  The Company also produces fluorine chemical products such as fluorinated hydrocarbon gas and shells and warheads for defense industry.

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Daikin Industries (6367 JP)

Malaysia: Stability Paves Way for Better Policy; UMNO-PAS Long-Term Challenge

MoU between PM and opposition PH (13 Sept) provides stability in exchange for political reform. But UMNO-PAS are using it to advance Malay...

Prasenjit K. Basu

🇯🇵 JAPAN • The Post-COVID Rotation Accelerates

Over the last 20 trading days during which TOPIX reached 1,974.99, many market leaders have seen a significant correction, and there has been a...

Campbell Gunn

🇯🇵 JAPAN • Results & Revisions - 10/05 Fuji, Weathernews, Create SD, Daikin, Coca Cola Japan

• BEST & WORST • Our best and worst pair is home centre Shimachu (8184 JP) for whom a rumoured bid from peer DCM has emerged and diaper...

Campbell Gunn

🇯🇵 JAPAN • Results & Revisions 4th August - Sony, CTC, Kakaku.com, Daikin, Yamaha, Tokai Carbon

•BEST & WORST 4th AUGUST • The 'best' and 'worst' from yesterday's large-cap announcements came from Itochu Techno Solutions (4739 JP) and NOK...

Campbell Gunn

🇯🇵 JAPAN • The Hundred Days War - COVID Heroes & Villains

THE 'HUNDRED DAYS WAR' - It is almost one hundred days since the equity markets began to discount the onset of COVID-19. Since the TOPIX closing...

Campbell Gunn

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52-week Range

Market Cap (USDm)

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Malaysia: Stability Paves Way for Better Policy; UMNO-PAS Long-Term Challenge

MoU between PM and opposition PH (13 Sept) provides stability in exchange for political reform. But UMNO-PAS are using it to advance Malay...

Prasenjit K. Basu

🇯🇵 JAPAN • The Post-COVID Rotation Accelerates

Over the last 20 trading days during which TOPIX reached 1,974.99, many market leaders have seen a significant correction, and there has been a...

Campbell Gunn

🇯🇵 JAPAN • Results & Revisions - 10/​​​​​​05 Fuji, Weathernews, Create SD, Daikin, Coca Cola Japan

• BEST & WORST • Our best and worst pair is home centre Shimachu (8184 JP) for whom a rumoured bid from peer DCM has emerged and diaper...

Campbell Gunn

🇯🇵 JAPAN • Results & Revisions 4th August - Sony, CTC, Kakaku.com, Daikin, Yamaha, Tokai Carbon

•BEST & WORST 4th AUGUST • The 'best' and 'worst' from yesterday's large-cap announcements came from Itochu Techno Solutions (4739 JP) and NOK...

Campbell Gunn

🇯🇵 JAPAN • The Hundred Days War - COVID Heroes & Villains

THE 'HUNDRED DAYS WAR' - It is almost one hundred days since the equity markets began to discount the onset of COVID-19. Since the TOPIX closing...

Campbell Gunn

🇯🇵 JAPAN • Results & Revisions - 10/05 Fuji, Weathernews, Create SD, Daikin, Coca Cola Japan