Japan Specialist

Mark Chadwick

<ul>
<li>
 Reforms Drive Improvement: Japan's corporate reforms, catalyzed by governance codes and TSE pressure, are fostering capital efficiency, shareholder value, and long-term equity gains.</li>
<li>
 "Name and Shame" Initiative Impact: TSE's disclosure initiative reveals 54% of Topix 500 companies enhancing capital efficiency, with early indications suggesting positive longer-term performance trends.</li>
<li>
 Future Alpha Opportunities: Expectation of increased disclosure in the coming months, particularly from proactive companies; potential for market surprises from obstructive firms trading below book value.</li>
</ul>



 Reforms Drive Improvement: Japan's corporate reforms, catalyzed by governance codes and TSE pressure, are fostering capital efficiency, shareholder value, and long-term equity gains.

 "Name and Shame" Initiative Impact: TSE's disclosure initiative reveals 54% of Topix 500 companies enhancing capital efficiency, with early indications suggesting positive longer-term performance trends.

 Future Alpha Opportunities: Expectation of increased disclosure in the coming months, particularly from proactive companies; potential for market surprises from obstructive firms trading below book value.


Japan Governance | Will Reforms Unlock Valuations

<ul>
<li>The TSE’s new efforts to encourage companies to disclose measures to improve their capital efficiency and stock prices correlate closely with general indicators of good governance.</li>
<li>Over 60% of companies that we classify as “Proactive” have already disclosed their status, while only around one third of “Obstructive” companies have done so.</li>
<li>Companies with higher levels of Board Independence and that are more aligned with shareholders are more likely to be better allocators of capital for long-term growth.</li>
</ul>


The TSE’s new efforts to encourage companies to disclose measures to improve their capital efficiency and stock prices correlate closely with general indicators of good governance.
Over 60% of companies that we classify as “Proactive” have already disclosed their status, while only around one third of “Obstructive” companies have done so.
Companies with higher levels of Board Independence and that are more aligned with shareholders are more likely to be better allocators of capital for long-term growth.


Financials & FinTech research, Galliano’s Financials Research

Victor Galliano

Financials & FinTech research

Financials & FinTech, EM & Developed Markets

Galliano’s Financials Research

Galliano's Financials Research provides fundamental research in Emerging Markets financials, including FinTech, as well as financials in select Developed Markets.

The investment style applied is generally value oriented, although Growth At Reasonable Price (GARP) strategies can also be used where appropriate. 

Our investment research approach aim is often contrarian, looking to capitalise on overly sceptical or optimistic consensus views. In terms of valuation techniques, the focus is on PBV ratio to ROE, PE multiples and dividend yield, as well as the application of PEG ratios and, where appropriate, Sum of the Parts (SOTP) valuations.

Equity Bottom-Up

<ul>
<li>We rate Japan Exchange as our 2024 high conviction buy in exchanges, for its attractive valuations, as well as its potential for increased market activity and big data revenue growth</li>
<li>We believe that Japan Exchange is the exception to the rule that DM exchanges need to diversify their revenue bases, as it is under less de-regulatory pressure</li>
<li>We also stick with Hong Kong Exchange as the deep value pick, as well as Deutsche Borse; we remain negative on Coinbase</li>
</ul>


We rate Japan Exchange as our 2024 high conviction buy in exchanges, for its attractive valuations, as well as its potential for increased market activity and big data revenue growth
We believe that Japan Exchange is the exception to the rule that DM exchanges need to diversify their revenue bases, as it is under less de-regulatory pressure
We also stick with Hong Kong Exchange as the deep value pick, as well as Deutsche Borse; we remain negative on Coinbase


Global Exchanges – Japan Exchange Is Our 2024 High Conviction Call

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<ul>
<li>We remain constructive on global equities as long as the MSCI ACWI (ACWI-US) holds above major support at $90.50-91.50.</li>
<li>We continue to monitor for whether ACWI-US and EEM-US break supports at $90.50-91.50 and $37, or if broken indexes (EURO STOXX 50, MSCI ACWI ex-US, EAFE) can reclaim supports.</li>
<li>Neither has happened yet, so we remain in wait-and-see mode. We are downgrading non-US small-caps to market weight. Non-US Value remains leadership -- remain overweight/buys in Financials and Communications</li>
</ul>


We remain constructive on global equities as long as the MSCI ACWI (ACWI-US) holds above major support at $90.50-91.50.
We continue to monitor for whether ACWI-US and EEM-US break supports at $90.50-91.50 and $37, or if broken indexes (EURO STOXX 50, MSCI ACWI ex-US, EAFE) can reclaim supports.
Neither has happened yet, so we remain in wait-and-see mode. We are downgrading non-US small-caps to market weight. Non-US Value remains leadership -- remain overweight/buys in Financials and Communications


MSCI ACWI, MSCI EM Still Above Supports; Buys in Global Value - Financials and Communications

Quantitative Researcher, MRM Research

Nico Rosti

Quantitative Researcher

MRM Research

Quantitative Research

Equity Derivatives

<ul>
<li>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> rallied +27% in the first 6 months of 2023. 6 months closed up, July closed (barely) down. The index can rise further in Aug/Sep.</li>
<li>If August is down, a LONG opportunity: look at support prices between 32391 and 30600,  good probability to see the market going higher from there.</li>
<li>If rallying in August, Nikkei could rise between +1.73% (33745) and +3.29% (34265). Continuation of the rally into September could reach higher prices but will encounter resistance at +8.29% (35922).</li>
</ul>


The Nikkei 225 (NKY INDEX) rallied +27% in the first 6 months of 2023. 6 months closed up, July closed (barely) down. The index can rise further in Aug/Sep.
If August is down, a LONG opportunity: look at support prices between 32391 and 30600,  good probability to see the market going higher from there.
If rallying in August, Nikkei could rise between +1.73% (33745) and +3.29% (34265). Continuation of the rally into September could reach higher prices but will encounter resistance at +8.29% (35922).


EQD | Nikkei 225 (NKY) MONTHLY Trajectories

Japan

Japan Exchange Group Inc is the holding company created through the merger of Tokyo Stock Exchange Group, Inc and Osaka Securities Exchange Co., Ltd. The group provides and operates a marketplace for the trading of equities, futures, and options. The Group manages the trading, as well as administers listed stocks and registered members.

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Japan Exchange Group (8697 JP)

Japan Governance | Will Reforms Unlock Valuations

Japan's corporate reforms are improving capital efficiency and shareholder value, with potential for future alpha opportunities through increased...

Mark Chadwick

Japan Governance | The TSE Naughty List

The TSE promotes disclosure of capital efficiency measures, correlating with good governance. Proactive companies disclose more than obstructive...

Mark Chadwick

Global Exchanges – Japan Exchange Is Our 2024 High Conviction Call

Japan Exchange is a high conviction buy due to attractive valuations, potential for higher market activity. We also like Hong Kong Exchange and...

Victor Galliano

MSCI ACWI, MSCI EM Still Above Supports; Buys in Global Value - Financials and Communications

MSCI $ACWI, MSCI EM $EEM Still Above Supports at $90.50-$91.50 and $37, though being tested today. Meanwhile, broken indexes (EURO $STOXX 50,...

Vermilion Research

EQD | Nikkei 225 (NKY) MONTHLY Trajectories

MONTHLY Trend Pattern Analysis of the Nikkei 225 Index: after 6 months up in a row and +27% gains, where is the index going next? Find support...

Nico Rosti

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Japan Governance | Will Reforms Unlock Valuations

​Japan's corporate reforms are improving capital efficiency and shareholder value, with potential for future alpha opportunities through increased...

Mark Chadwick

Japan Governance | The TSE Naughty List

​The TSE promotes disclosure of capital efficiency measures, correlating with good governance. Proactive companies disclose more than obstructive...

Mark Chadwick

Global Exchanges – Japan Exchange Is Our 2024 High Conviction Call

​Japan Exchange is a high conviction buy due to attractive valuations, potential for higher market activity. We also like Hong Kong Exchange and...

Victor Galliano

MSCI ACWI, MSCI EM Still Above Supports; Buys in Global Value - Financials and Communications

MSCI $ACWI, MSCI EM $EEM Still Above Supports at $90.50-$91.50 and $37, though being tested today. Meanwhile, broken indexes (EURO $STOXX 50,...

Vermilion Research

EQD | Nikkei 225 (NKY) MONTHLY Trajectories

MONTHLY Trend Pattern Analysis of the Nikkei 225 Index: after 6 months up in a row and +27% gains, where is the index going next? Find support...

Nico Rosti

Japan's corporate reforms are improving capital efficiency and shareholder value, with potential for future alpha opportunities through increased...

The TSE promotes disclosure of capital efficiency measures, correlating with good governance. Proactive companies disclose more than obstructive...

Japan Exchange is a high conviction buy due to attractive valuations, potential for higher market activity. We also like Hong Kong Exchange and...