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>With 3 days left in the review period, <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> has a 11.29% weight 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>. That means double capping in March.</li>
<li>If <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> underperforms the other index stocks by 1.8% from now to the close on 31 January, there will only be a single level of capping.</li>
<li>Double capping will result in big selling on <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> and big inflows into the other index constituents. Smaller impact for single level capping.</li>
</ul>


With 3 days left in the review period, Fast Retailing (9983 JP) has a 11.29% weight in the Nikkei 225 (NKY INDEX). That means double capping in March.
If Fast Retailing (9983 JP) underperforms the other index stocks by 1.8% from now to the close on 31 January, there will only be a single level of capping.
Double capping will result in big selling on Fast Retailing (9983 JP) and big inflows into the other index constituents. Smaller impact for single level capping.


Fast Retailing (9983 JP): Double Capping & The Reverse Funding Trade

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>Unless Fast Retailing (9983) underperforms Nikkei 225 by 10% by Friday close, there will be a capping exercise at the next Nikkei 225 Rebalance at the end of March 2025.</li>
<li>The evolution of tech stock movement in Japan in the next day or three is important to watch. There will be effects.</li>
<li>The setup very near-term could be pretty interesting, and worth watching.</li>
</ul>


Unless Fast Retailing (9983) underperforms Nikkei 225 by 10% by Friday close, there will be a capping exercise at the next Nikkei 225 Rebalance at the end of March 2025.
The evolution of tech stock movement in Japan in the next day or three is important to watch. There will be effects.
The setup very near-term could be pretty interesting, and worth watching.


Fast Retailing (9983) Capping Decision This Week - Single or Double Dose?

Japan Specialist

Mark Chadwick

Equity Bottom-Up

<ul>
<li>Fast Retailing reported significant gains in revenue and profitability for the first quarter of FY2025.</li>
<li>Strong performances in North America &amp; Europe (+31% YoY), and Asia (+17%), offset challenges in Greater China (-1%)</li>
<li>Overall revenue and operating profit figures came in marginally stronger than our estimates</li>
</ul>


Fast Retailing reported significant gains in revenue and profitability for the first quarter of FY2025.
Strong performances in North America &amp; Europe (+31% YoY), and Asia (+17%), offset challenges in Greater China (-1%)
Overall revenue and operating profit figures came in marginally stronger than our estimates


Fast Retailing (9983) | Global Growth Shines Amid China Challenges

<ul>
<li>Inditex's rare quarterly miss on sales and profit, driven by currency fluctuations, may heighten sensitivity around Fast Retailing's upcoming Q1 results</li>
<li>For Fast, the risk would be a top-line miss given high valuation multiples and elevated expectations</li>
<li>Over the past several quarters, Fast's superior top line growth has supported higher valuation multiples. We expect 9% revenue growth in Q1</li>
</ul>


Inditex's rare quarterly miss on sales and profit, driven by currency fluctuations, may heighten sensitivity around Fast Retailing's upcoming Q1 results
For Fast, the risk would be a top-line miss given high valuation multiples and elevated expectations
Over the past several quarters, Fast's superior top line growth has supported higher valuation multiples. We expect 9% revenue growth in Q1


Fast Retailing (9983) | Inditex's Q3 Miss - Implications for Uniqlo

Derivatives and Quantitative Strategist

Gaudenz Schneider

Equity Derivatives

<ul>
<li>This strategy exploits relative value in implied volatilities and combines it with a long Nifty 50 vs. short Nikkei 225 directional view over a period of two months.</li>
<li>The strategy performs well if the Nifty 50 rises <em>and</em> outperforms the Nikkei 225. If both indices decline, neither profit nor loss is incurred.</li>
<li>Leverage increases both the strategy's payoff and probability of success.</li>
</ul>


This strategy exploits relative value in implied volatilities and combines it with a long Nifty 50 vs. short Nikkei 225 directional view over a period of two months.
The strategy performs well if the Nifty 50 rises and outperforms the Nikkei 225. If both indices decline, neither profit nor loss is incurred.
Leverage increases both the strategy's payoff and probability of success.


EQD | Long Nifty 50 Vs. Short Nikkei 225 - A Relative Value Option Strategy with a Kicker

Japan

FAST RETAILING CO., LTD. operates a chain of clothing stores, UNIQLO, throughout Japan and in other markets overseas including UK, China, Hong Kong, South Korea, US, France, Singapore and Russia.  The Company designs, manufactures, and retails its own line of casual clothing.

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Fast Retailing (9983 JP)