Quantitative Researcher, MRM Research

Nico Rosti

Quantitative Researcher

MRM Research

Quantitative Research

Equity Derivatives

<ul>
<li>A quick synoptic look at the tactical models for some key indices, stocks, commodities and bonds we cover, for the week July 14 - July 19.</li>
<li>The most noticeable highlights are: all US markets and stocks we cover sold off last week, apart from <a href="https://www.smartkarma.com/entities/amazon-com-inc" target="_blank" data-smartkarma-citation="entities:409:1" rel="noopener">Amazon.com (AMZN US)</a> , <a href="https://www.smartkarma.com/entities/alphabet-inc-cl-c" target="_blank" data-smartkarma-citation="entities:11369:1" rel="noopener">Alphabet (GOOG US)</a> and <a href="https://www.smartkarma.com/entities/nvidia-corp" target="_blank" data-smartkarma-citation="entities:5891:1" rel="noopener">NVIDIA Corp (NVDA US)</a> </li>
<li>In Asia, <a href="https://www.smartkarma.com/entities/byd-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20962:1" rel="noopener"><strong>BYD (1211 HK)</strong></a><strong> is very oversold</strong>, and <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> is also oversold. <a href="https://www.smartkarma.com/entities/gold" target="_blank" data-smartkarma-citation="entities:22870:1" rel="noopener">Gold (GOLD COMDTY)</a> and <a href="https://www.smartkarma.com/entities/crude-oil" target="_blank" data-smartkarma-citation="entities:22869:1" rel="noopener">Crude Oil (CL1 COM COMDTY)</a> start to be overbought.</li>
</ul>


A quick synoptic look at the tactical models for some key indices, stocks, commodities and bonds we cover, for the week July 14 - July 19.
The most noticeable highlights are: all US markets and stocks we cover sold off last week, apart from Amazon.com (AMZN US) , Alphabet (GOOG US) and NVIDIA Corp (NVDA US) 
In Asia, BYD (1211 HK) is very oversold, and Fast Retailing (9983 JP) is also oversold. Gold (GOLD COMDTY) and Crude Oil (CL1 COM COMDTY) start to be overbought.


Global Markets Tactical Outlook: Week of July 14 – July 19

Japan Specialist

Mark Chadwick

Equity Bottom-Up

<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

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

Index Rebalance

<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 Index</a> March rebalance ends in January. There could be one outright change and one or two others driven by sector balance.</li>
<li>Depending on the changes, passive trackers will need to buy between 8.2-20.5x ADV (8.75%-24.5% of real float) and sell between 9-38x 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</a>'s PAF could see a double reduction to keep the stock weight capped at 10%. There will be huge passive selling leading to funding inflows for other index constituents.</li>
</ul>


The review period for the Nikkei 225 Index March rebalance ends in January. There could be one outright change and one or two others driven by sector balance.
Depending on the changes, passive trackers will need to buy between 8.2-20.5x ADV (8.75%-24.5% of real float) and sell between 9-38x ADV on the deletions.

Fast Retailing's PAF could see a double reduction to keep the stock weight capped at 10%. There will be huge passive selling leading to funding inflows for other index constituents.


Nikkei 225 Index Rebalance Preview (Mar 2025): Ranking, Capping, Funding & Other Changes

<ul>
<li>Fast Retailing, through its flagship Uniqlo, is redefining retail by focusing on high-quality, functional apparel, surpassing global peers in operating profit margins.</li>
<li>The company’s “scrap &amp; build” strategy revitalizes underperforming stores in China, while expanding internationally, with a strong growth trajectory across North America and Europe.</li>
<li>With a revised fair value of 52,500 yen, we forecast significant sales growth, driven by favorable seasonal trends, global expansion and recovering consumer sentiment in China.</li>
</ul>


Fast Retailing, through its flagship Uniqlo, is redefining retail by focusing on high-quality, functional apparel, surpassing global peers in operating profit margins.
The company’s “scrap &amp; build” strategy revitalizes underperforming stores in China, while expanding internationally, with a strong growth trajectory across North America and Europe.
With a revised fair value of 52,500 yen, we forecast significant sales growth, driven by favorable seasonal trends, global expansion and recovering consumer sentiment in China.


Fast Retailing(9983) | Weaving a Global Empire; FY8/25 Outlook

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>At end-September, the Nikkei 225 semi-annual review imposed a "cap" 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> in the Average, applying a 0.9 coefficient to the Price Adjustment Factor.</li>
<li>At its current weight, Fast Retailing will be capped again in March 2025. If the stock outperforms Nikkei 225 by another 3% before 31 January 2025, it could be double-capped.</li>
<li>And an additional 16% would mean ¥1.1trln of sales in March. But like last time, this is a rubber band which stretches. Too far, and selling pressure is obvious.</li>
</ul>


At end-September, the Nikkei 225 semi-annual review imposed a "cap" on Fast Retailing (9983 JP) in the Average, applying a 0.9 coefficient to the Price Adjustment Factor.
At its current weight, Fast Retailing will be capped again in March 2025. If the stock outperforms Nikkei 225 by another 3% before 31 January 2025, it could be double-capped.
And an additional 16% would mean ¥1.1trln of sales in March. But like last time, this is a rubber band which stretches. Too far, and selling pressure is obvious.


Mar25 Nikkei 225 Rebal: Considering Fast Retailing Capping.... Again...

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)

Global Markets Tactical Outlook: Week of July 14 – July 19

Our Weekly Tactical Outlook: US sold-off last week, except for Amazon, Alphabet, and NVIDIA (overbought). BYD and Fast Retailing are oversold in...

Nico Rosti

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

Fast's strong growth in recent quarters has supported elevated valuation multiples, with an expected 9% revenue growth in Q1.

Mark Chadwick

Nikkei 225 Index Rebalance Preview (Mar 2025): Ranking, Capping, Funding & Other Changes

There should be 1 change, could be 3 due to sector balance. The impact on the potential changes varies from 8-38x ADV. Fast Retailing could see a...

Brian Freitas

Fast Retailing(9983) | Weaving a Global Empire; FY8/25 Outlook

Fast Retailing's Uniqlo is redefining retail with high-quality apparel, strong profit margins, and global expansion plans driving significant...

Mark Chadwick

Mar25 Nikkei 225 Rebal: Considering Fast Retailing Capping.... Again...

Fast Retailing is the first Nikkei 225 stock to be capped. That meant nearly ¥400bn of selling yesterday. Now it is due to be capped again in 6...

Travis Lundy

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52-week Range

Market Cap (USDm)

P/E

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Global Markets Tactical Outlook: Week of July 14 – July 19

Our Weekly Tactical Outlook: US sold-off last week, except for Amazon, Alphabet, and NVIDIA (overbought). BYD and Fast Retailing are oversold in...

Nico Rosti

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

Fast's strong growth in recent quarters has supported elevated valuation multiples, with an expected 9% revenue growth in Q1.

Mark Chadwick

Nikkei 225 Index Rebalance Preview (Mar 2025): Ranking, Capping, Funding & Other Changes

There should be 1 change, could be 3 due to sector balance. The impact on the potential changes varies from 8-38x ADV. Fast Retailing could see a...

Brian Freitas

Fast Retailing(9983) | Weaving a Global Empire; FY8/25 Outlook

​Fast Retailing's Uniqlo is redefining retail with high-quality apparel, strong profit margins, and global expansion plans driving significant...

Mark Chadwick

Mar25 Nikkei 225 Rebal: Considering Fast Retailing Capping.... Again...

Fast Retailing is the first Nikkei 225 stock to be capped. That meant nearly ¥400bn of selling yesterday. Now it is due to be capped again in 6...

Travis Lundy

Fast Retailing's Uniqlo is redefining retail with high-quality apparel, strong profit margins, and global expansion plans driving significant...