Japan Specialist

Mark Chadwick

Thematic (Sector/Industry)

<ul>
<li>OVERSEAS. Beta Roars back as SPX regains 4100 support; All SPX sector positive(ex-Energy); CPI in focus as US 2Yr Yields still at 4.5%; Fed Pause or Acceleration-is the question</li>
<li>JAPAN. NKY Futs +1.0% vs Cash; Yen Weakens to 132.45 vs US;  JGB at 2% next year ? So says Koll; Citizen Watch shakes things up with Massive Buyback</li>
<li>DAILY NUGGET.  Buybacks been been certainly improving in Japan. But this action from Citizen Watch takes it to another level.</li>
</ul>


OVERSEAS. Beta Roars back as SPX regains 4100 support; All SPX sector positive(ex-Energy); CPI in focus as US 2Yr Yields still at 4.5%; Fed Pause or Acceleration-is the question
JAPAN. NKY Futs +1.0% vs Cash; Yen Weakens to 132.45 vs US;  JGB at 2% next year ? So says Koll; Citizen Watch shakes things up with Massive Buyback
DAILY NUGGET.  Buybacks been been certainly improving in Japan. But this action from Citizen Watch takes it to another level.


Good Morning Japan |Beta BACK-Ahead of CPI; Citizen Watch LEADS=>Massive Buyback; Toyota EV Shift?

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Shinko Electric Industries / Event-Driven

<ul>
<li>Three years ago I wrote <a href="https://www.smartkarma.com/insights/fujitsu-subsidiary-selldowns-or-buy-ins" target="_blank" data-smartkarma-citation="insights:35032" rel="noopener">Fujitsu Subsidiary Selldowns or Buy-Ins?</a> My choice then was Fujitsu Frontech which was bought out 8 months later. </li>
<li>A Bloomberg article today with quotes from an interview with the CEO of Fujitsu fuelled some movement today. </li>
<li>The "obvious" trade is <a href="https://www.smartkarma.com/entities/shinko-electric-industries" target="_blank" data-smartkarma-citation="entities:15066:1" rel="noopener">Shinko Electric Industries (6967 JP)</a> but you have to buy the new dream.</li>
</ul>


Three years ago I wrote Fujitsu Subsidiary Selldowns or Buy-Ins? My choice then was Fujitsu Frontech which was bought out 8 months later. 
A Bloomberg article today with quotes from an interview with the CEO of Fujitsu fuelled some movement today. 
The "obvious" trade is Shinko Electric Industries (6967 JP) but you have to buy the new dream.


Fujitsu (6702) Subsidiary Selldowns To Come

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.

Equity Bottom-Up

<ul>
<li>Nidec has become an auto parts and factory automation company and should be valued as such. At 24x EPS guidance for FY Mar-23, the shares do not look particularly cheap.</li>
<li>1H results were good, but heavy up-front investment in e-axle traction motor systems for electric vehicles points to deferred gratification for shareholders. </li>
<li>Recession is starting to bite, the Yen is up and Japanese interest rates have only started to rise. Be careful when buying for long-term growth.</li>
</ul>


Nidec has become an auto parts and factory automation company and should be valued as such. At 24x EPS guidance for FY Mar-23, the shares do not look particularly cheap.
1H results were good, but heavy up-front investment in e-axle traction motor systems for electric vehicles points to deferred gratification for shareholders. 
Recession is starting to bite, the Yen is up and Japanese interest rates have only started to rise. Be careful when buying for long-term growth.


Managing Director, Zero One, Zero One

Vincent Fernando, CFA

Managing Director, Zero One

TSMC (Taiwan Semiconductor Manufacturing) - ADR / Equity Bottom-Up

TSMC (Taiwan Semiconductor Manufacturing) - ADR

<ul>
<li>TSMC's revenue could drop in the near-term due to customers cutting orders, however full year 2023E growth still likely thanks to advanced chips.</li>
<li>Samsung has guided staff internally for a major slump in its semiconductor unit's operating profit.</li>
<li>Apple is pushing for price cuts amongst its suppliers due to weak end demand for its products.</li>
</ul>


TSMC's revenue could drop in the near-term due to customers cutting orders, however full year 2023E growth still likely thanks to advanced chips.
Samsung has guided staff internally for a major slump in its semiconductor unit's operating profit.
Apple is pushing for price cuts amongst its suppliers due to weak end demand for its products.


Taiwan Tech Weekly: Signs TSMC Winning the 3-Nm Battle Vs. Samsung, Apple Bargaining Down Suppliers

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

<ul>
<li>At the October rebalance, there are 970 stocks that will have a lower FFW while 114 stocks will have a higher FFW. 493 stocks will undergo a Phased Weight Reduction.</li>
<li>Estimated one-way turnover is 2.54% resulting in a one-way trade of ¥1.815tn. 500 stocks have over 4 days ADV to trade, 100 stocks have over 9 days ADV to trade.</li>
<li>Setting the threshold at +/-US$50m to trade, the stocks with inflows have outperformed the stocks with outflows by 6.5% over the last four months.</li>
</ul>


At the October rebalance, there are 970 stocks that will have a lower FFW while 114 stocks will have a higher FFW. 493 stocks will undergo a Phased Weight Reduction.
Estimated one-way turnover is 2.54% resulting in a one-way trade of ¥1.815tn. 500 stocks have over 4 days ADV to trade, 100 stocks have over 9 days ADV to trade.
Setting the threshold at +/-US$50m to trade, the stocks with inflows have outperformed the stocks with outflows by 6.5% over the last four months.


TOPIX October Rebalance: BIG One With ¥1.8tn a Side to Trade

Japan

DENSO CORPORATION manufactures electronic parts for automobiles.  The Company's products include automobile air conditioners, air bags, ignition systems, generators, power steering systems, and spark plugs with iridium electrode. The Company also produces communication equipment for mobile navigation system.

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Denso Corp (6902 JP)

Good Morning Japan |Beta BACK-Ahead of CPI; Citizen Watch LEADS=>Massive Buyback; Toyota EV Shift?

JGB at 2% next year ? So says Koll; Citizen Watch shakes things up with Massive Buyback. JGB at 2% next year ? So says Koll; Citizen Watch shakes...

Mark Chadwick

Fujitsu (6702) Subsidiary Selldowns To Come

A Bloomberg article on Fujitsu selling non-core subs was out today. Nothing new, but there is some nuance. I present a small review, and conclude...

Travis Lundy

Nidec (6594 JP): New Valuation Benchmark

It is fashionable to criticize Nidec's business model, but valuation compression is the greater risk. Japanese interest rates have started to rise...

Scott Foster

Taiwan Tech Weekly: Signs TSMC Winning the 3-Nm Battle Vs. Samsung, Apple Bargaining Down Suppliers

TSMC's revenue could drop in the near-term due to customers cutting orders, however full year 2023E growth still likely thanks to advanced chips.

Vincent Fernando, CFA

TOPIX October Rebalance: BIG One With ¥1.8tn a Side to Trade

Lower FFWs on 970 stocks and higher FFWs on 114 stocks will result in one-way turnover of 2.52% leading to a one-way trade of ¥1.8tn at the close...

Brian Freitas

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