Index Rebal Trades & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Index Rebal Trades & Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Event-Driven

Daiwa House Reit Investment / Event-Driven

<p>J-REITs have historically outperformed the TSEREIT Index on average in the wake of follow-on equity offerings, with win rates exceeding 80%.</p><p>While the offerings are mostly of interest to primary market investors, we also see such offerings as catalysts for strong secondary market performance making these events worth tracking for secondary market investors too. We have previously discussed the historical pre- and post-offering performance of JREITs in <em><a href="https://www.smartkarma.com/insights/j-reit-offering-primer-get-ready-for-offering-season-2021" target="_blank" data-smartkarma-citation="insights:46416" rel="noopener">J-REIT Offering Primer: Get Ready for Offering Season 2021</a></em>. In this insight, we evaluate the attractiveness of the latest candidate to launch such a follow-on equity offerings - <a href="https://www.smartkarma.com/entities/daiwa-house-reit-investment-cb077099-8006-45e4-83cf-6ac7f19cd384" target="_blank" data-smartkarma-citation="entities:11283:1" rel="noopener">Daiwa House Reit Investment (8984 JP)</a><strong>("DHR")</strong> - with greater emphasis on the potential for strong post-offering secondary market performance. </p><p>DHR announced a <a href="https://www.daiwahouse-reit.co.jp/file/en-ir_news-3926cc869b501ab42a4918d64facbc098f8c6b97.pdf" target="_blank" rel="noopener">follow-on equity offering</a> after the close on 18th August 2021 to fund part of their recent property acquisition. The primary offer quantity is 115,000 units. In addition, there will also be an over-allotment quantity of 9,000 units. The total size of this offering could be roughly ¥37.7bn (~US$343mn) which is slightly larger than some of the recent offerings by other JREITs. </p><p>The Offer Price will be determined between 25th August 2021 and 27th August 2021 (typically it has been the first day of this window for most JREIT offerings) and the two business days following the Offer Price Determination Day ("Pricing Date") will be the Application Date. </p><p><em>More below the fold. </em></p>

J-REITs have historically outperformed the TSEREIT Index on average in the wake of follow-on equity offerings, with win rates exceeding 80%.While the offerings are mostly of interest to primary market investors, we also see such offerings as catalysts for strong secondary market performance making these events worth tracking for secondary market investors too. We have previously discussed the historical pre- and post-offering performance of JREITs in J-REIT Offering Primer: Get Ready for Offering Season 2021. In this insight, we evaluate the attractiveness of the latest candidate to launch such a follow-on equity offerings - Daiwa House Reit Investment (8984 JP)("DHR") - with greater emphasis on the potential for strong post-offering secondary market performance. DHR announced a follow-on equity offering after the close on 18th August 2021 to fund part of their recent property acquisition. The primary offer quantity is 115,000 units. In addition, there will also be an over-allotment quantity of 9,000 units. The total size of this offering could be roughly ¥37.7bn (~US$343mn) which is slightly larger than some of the recent offerings by other JREITs. The Offer Price will be determined between 25th August 2021 and 27th August 2021 (typically it has been the first day of this window for most JREIT offerings) and the two business days following the Offer Price Determination Day ("Pricing Date") will be the Application Date. More below the fold. 

Daiwa House REIT Investment (8984 JP): Expect A Correction Before Pricing Date

Alpha-Centric ESG Research

Kyle Rudden

<p>Announcements keep on coming from <a href="https://www.smartkarma.com/entities/singapore-exchange-ltd" target="_blank" data-smartkarma-citation="entities:1047:1" rel="noopener">Singapore Exchange (SGX SP)</a> and its SGX FIRST sustainable investing platform. Weeks after launching Climate Impact X – SGX's carbon exchange joint venture with DBS, Standard Chartered, and Temasek – the exchange announced (on 14 June) the launch of the <a href="https://www.smartkarma.com/entities/sgx-nikkei-esg-reit-index-futures" target="_blank" data-smartkarma-citation="entities:33480:1" rel="noopener">SGX Nikkei ESG-REIT Index Futures (JRTA INDEX)</a> contract.</p><p>For SGX, the launch further solidifies its position as Asia's leading financial exchange for all things sustainable investing and finance (and of course, REITs). For investors, the ESG-REIT Index futures contract expands the menu of products for REIT-related ESG investing. That is far more significant than it sounds; Real Estate is a sleeping ESG giant of sorts, and investment products are lacking.</p><p>Therein lies the second of two goals for this Insight. The first is, rather obviously, to delve into the SGX Nikkei ESG-REIT product – the underlying index and futures contract. The second is to take it as an opportunity to broach an important, but often underrated, topic – the relationships between ESG and the Real Estate sector, including REITs. Much of it positive, or at least potentially so.</p><p>Think about it. One billion buildings in the world already, and expected to double by 2060.</p>

Announcements keep on coming from Singapore Exchange (SGX SP) and its SGX FIRST sustainable investing platform. Weeks after launching Climate Impact X – SGX's carbon exchange joint venture with DBS, Standard Chartered, and Temasek – the exchange announced (on 14 June) the launch of the SGX Nikkei ESG-REIT Index Futures (JRTA INDEX) contract.For SGX, the launch further solidifies its position as Asia's leading financial exchange for all things sustainable investing and finance (and of course, REITs). For investors, the ESG-REIT Index futures contract expands the menu of products for REIT-related ESG investing. That is far more significant than it sounds; Real Estate is a sleeping ESG giant of sorts, and investment products are lacking.Therein lies the second of two goals for this Insight. The first is, rather obviously, to delve into the SGX Nikkei ESG-REIT product – the underlying index and futures contract. The second is to take it as an opportunity to broach an important, but often underrated, topic – the relationships between ESG and the Real Estate sector, including REITs. Much of it positive, or at least potentially so.Think about it. One billion buildings in the world already, and expected to double by 2060.

SGX Nikkei ESG-REIT Index Futures Launch Is an Ideal Backdrop for an Important Topic: ESG and REITs

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Quantitative Analysis

<div><p>The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.</p></div><div><p>Hong Kong saw shorts rise on <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a>, <a href="https://www.smartkarma.com/entities/jd-health-international-inc" target="_blank" data-smartkarma-citation="entities:29677:1" rel="noopener">JD Health (6618 HK)</a>, <a href="https://www.smartkarma.com/entities/beijing-kuaishou-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:29725:1" rel="noopener">Kuaishou Technology (1024 HK)</a>, <a href="https://www.smartkarma.com/entities/smoore-international" target="_blank" data-smartkarma-citation="entities:28241:1" rel="noopener">Smoore International (6969 HK)</a> and <a href="https://www.smartkarma.com/entities/microport-scientific-corp" target="_blank" data-smartkarma-citation="entities:4487:1" rel="noopener">Microport Scientific (853 HK)</a> while there was short covering on <a href="https://www.smartkarma.com/entities/ping-an-insurance-grp-co-of-china-ltd" target="_blank" data-smartkarma-citation="entities:12880:1" rel="noopener">Ping An Insurance (H) (2318 HK)</a>, <a href="https://www.smartkarma.com/entities/aia-group-ltd" target="_blank" data-smartkarma-citation="entities:14895:1" rel="noopener">AIA Group Ltd (1299 HK)</a>, <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a>, <a href="https://www.smartkarma.com/entities/sunny-optical-tech" target="_blank" data-smartkarma-citation="entities:13363:1" rel="noopener">Sunny Optical (2382 HK)</a> and <a href="https://www.smartkarma.com/entities/hsbc-holdings-plc" target="_blank" data-smartkarma-citation="entities:516:1" rel="noopener">HSBC Holdings (5 HK)</a>. Shorts increased in the Consumer Discretionary and Health Care sectors, while decreasing in Financials and Industrials sectors.</p></div><div><p>In Japan, stocks increased on <a href="https://www.smartkarma.com/entities/kirin-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:16977:1" rel="noopener">Kirin Holdings (2503 JP)</a>, <a href="https://www.smartkarma.com/entities/nippon-building-fund-inc" target="_blank" data-smartkarma-citation="entities:1900:1" rel="noopener">Nippon Building Fund (8951 JP)</a>, <a href="https://www.smartkarma.com/entities/nippon-telegraph-telephone-corporation" target="_blank" data-smartkarma-citation="entities:623:1" rel="noopener">NTT (Nippon Telegraph &amp; Telephone) (9432 JP)</a>, <a href="https://www.smartkarma.com/entities/hulic-co-ltd" target="_blank" data-smartkarma-citation="entities:388:1" rel="noopener">Hulic Co Ltd (3003 JP)</a> and <a href="https://www.smartkarma.com/entities/japan-prime-realty-investmen" target="_blank" data-smartkarma-citation="entities:495:1" rel="noopener">Japan Prime Realty Investmen (8955 JP)</a> while there was short covering on <a href="https://www.smartkarma.com/entities/toshiba-corp" target="_blank" data-smartkarma-citation="entities:637:1" rel="noopener">Toshiba Corp (6502 JP)</a>, <a href="https://www.smartkarma.com/entities/inpex-corp" target="_blank" data-smartkarma-citation="entities:20665:1" rel="noopener">Inpex Corp (1605 JP)</a>, <a href="https://www.smartkarma.com/entities/casio-computer-co-ltd" target="_blank" data-smartkarma-citation="entities:18338:1" rel="noopener">Casio Computer (6952 JP)</a>, <a href="https://www.smartkarma.com/entities/showa-denko-k-k" target="_blank" data-smartkarma-citation="entities:1496:1" rel="noopener">Showa Denko K.K. (4004 JP)</a> and <a href="https://www.smartkarma.com/entities/medley-inc" target="_blank" data-smartkarma-citation="entities:31041:1" rel="noopener">Medley (4480 JP)</a>. Shorts increased on Consumer Staples, Real Estate and Communication Services, while reducing on Industrials, Energy and Consumer Discretionary names.</p></div><div><p>In Korea, shorts increased on <a href="https://www.smartkarma.com/entities/hmm-co-ltd" target="_blank" data-smartkarma-citation="entities:13494:1" rel="noopener">HMM Co., Ltd. (011200 KS)</a>, <a href="https://www.smartkarma.com/entities/doosan-heavy-industries-construction" target="_blank" data-smartkarma-citation="entities:7389:1" rel="noopener">Doosan Heavy Industries &amp; Construction (034020 KS)</a>, <a href="https://www.smartkarma.com/entities/lg-display-co-ltd" target="_blank" data-smartkarma-citation="entities:7145:1" rel="noopener">LG Display (034220 KS)</a> and <a href="https://www.smartkarma.com/entities/hanwha-solutions" target="_blank" data-smartkarma-citation="entities:8656:1" rel="noopener">Hanwha Solutions (009830 KS)</a> while shorts were covered on <a href="https://www.smartkarma.com/entities/samsung-electronics-co-ltd" target="_blank" data-smartkarma-citation="entities:191:1" rel="noopener">Samsung Electronics (005930 KS)</a>, <a href="https://www.smartkarma.com/entities/naver-corp" target="_blank" data-smartkarma-citation="entities:16029:1" rel="noopener">Naver Corp (035420 KS)</a>, <a href="https://www.smartkarma.com/entities/sk-hynix-inc" target="_blank" data-smartkarma-citation="entities:16955:1" rel="noopener">SK Hynix (000660 KS)</a> and <a href="https://www.smartkarma.com/entities/lg-chem-ltd" target="_blank" data-smartkarma-citation="entities:3583:1" rel="noopener">LG Chem Ltd (051910 KS)</a>.</p></div><div><p>In Taiwan, shorts increased on <a href="https://www.smartkarma.com/entities/asustek-computer-inc" target="_blank" data-smartkarma-citation="entities:13002:1" rel="noopener">Asustek Computer (2357 TT)</a>, <a href="https://www.smartkarma.com/entities/unimicron-technology-corp" target="_blank" data-smartkarma-citation="entities:18778:1" rel="noopener">Unimicron Technology (3037 TT)</a>, <a href="https://www.smartkarma.com/entities/nanya-technology-corp" target="_blank" data-smartkarma-citation="entities:3269:1" rel="noopener">Nanya Technology (2408 TT)</a>, <a href="https://www.smartkarma.com/entities/innolux-corp" target="_blank" data-smartkarma-citation="entities:4509:1" rel="noopener">Innolux Corp (3481 TT)</a> and <a href="https://www.smartkarma.com/entities/hannstar-display-corp" target="_blank" data-smartkarma-citation="entities:13922:1" rel="noopener">Hannstar Display (6116 TT)</a> while shorts covered on <a href="https://www.smartkarma.com/entities/evergreen-marine-corp-ltd" target="_blank" data-smartkarma-citation="entities:15428:1" rel="noopener">Evergreen Marine Corp (2603 TT)</a>, <a href="https://www.smartkarma.com/entities/china-airlines-ltd" target="_blank" data-smartkarma-citation="entities:4591:1" rel="noopener">China Airlines (2610 TT)</a>, <a href="https://www.smartkarma.com/entities/fitipower-integrated-technology-inc" target="_blank" data-smartkarma-citation="entities:8712:1" rel="noopener">Fitipower Integrated Technology (4961 TT)</a>, <a href="https://www.smartkarma.com/entities/mediatek-inc" target="_blank" data-smartkarma-citation="entities:772:1" rel="noopener">Mediatek Inc (2454 TT)</a> and <a href="https://www.smartkarma.com/entities/ase-technology-holding-co-ltd" target="_blank" data-smartkarma-citation="entities:27270:1" rel="noopener">ASE Technology Holding Co Ltd (3711 TT)</a>.</p></div>

The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.Hong Kong saw shorts rise on Meituan (3690 HK), JD Health (6618 HK), Kuaishou Technology (1024 HK), Smoore International (6969 HK) and Microport Scientific (853 HK) while there was short covering on Ping An Insurance (H) (2318 HK), AIA Group Ltd (1299 HK), Tencent (700 HK), Sunny Optical (2382 HK) and HSBC Holdings (5 HK). Shorts increased in the Consumer Discretionary and Health Care sectors, while decreasing in Financials and Industrials sectors.In Japan, stocks increased on Kirin Holdings (2503 JP), Nippon Building Fund (8951 JP), NTT (Nippon Telegraph &amp; Telephone) (9432 JP), Hulic Co Ltd (3003 JP) and Japan Prime Realty Investmen (8955 JP) while there was short covering on Toshiba Corp (6502 JP), Inpex Corp (1605 JP), Casio Computer (6952 JP), Showa Denko K.K. (4004 JP) and Medley (4480 JP). Shorts increased on Consumer Staples, Real Estate and Communication Services, while reducing on Industrials, Energy and Consumer Discretionary names.In Korea, shorts increased on HMM Co., Ltd. (011200 KS), Doosan Heavy Industries &amp; Construction (034020 KS), LG Display (034220 KS) and Hanwha Solutions (009830 KS) while shorts were covered on Samsung Electronics (005930 KS), Naver Corp (035420 KS), SK Hynix (000660 KS) and LG Chem Ltd (051910 KS).In Taiwan, shorts increased on Asustek Computer (2357 TT), Unimicron Technology (3037 TT), Nanya Technology (2408 TT), Innolux Corp (3481 TT) and Hannstar Display (6116 TT) while shorts covered on Evergreen Marine Corp (2603 TT), China Airlines (2610 TT), Fitipower Integrated Technology (4961 TT), Mediatek Inc (2454 TT) and ASE Technology Holding Co Ltd (3711 TT).

Asia Shorts: Meituan, JDH, Smoore, Ping An, Kirin, NTT, Toshiba, HMM, Doosan, LGD, Hanwha, Evergreen

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

<p>Despite a much more mixed market environment, our weight-of-the-evidence approach continues to support a constructive intermediate-term outlook. The bottom line: there is little evidence that suggests a pullback would be anything more than a buying opportunity.</p>

Despite a much more mixed market environment, our weight-of-the-evidence approach continues to support a constructive intermediate-term outlook. The bottom line: there is little evidence that suggests a pullback would be anything more than a buying opportunity.

Defensives Are Worth A Look; Hang Seng, Shanghai Comp, Nikkei 225, STOXX 50 Support Levels Holding

<p>In 2020, we have so far witnessed 15 follow-on JREIT offerings cumulatively raising JPY463bn (~US$4.5bn). This has been something of a weak year, understandable because of the covid-19 crisis which hit equity market and JREIT prices in March, and keeping them soft for months afterwards.</p>
<p>Historically, January and February are the busiest months, for a variety of reasons.</p>
<p>From 2015-2020, on average, there have been ~7 offerings from the top 40 JREITs announced within the first two months of the calendar year accounting for roughly a third of the total number of offerings in each year during that period. </p>
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Source: Quiddity, Capital IQ (Data)</div>
In this insight, we take a look at the prospective candidates who are most likely to launch follow-on equity offerings near-term, and we look at the performance characteristics of J-REIT follow-on offerings and the likelihood of profit from participating in the event.</section>

In 2020, we have so far witnessed 15 follow-on JREIT offerings cumulatively raising JPY463bn (~US$4.5bn). This has been something of a weak year, understandable because of the covid-19 crisis which hit equity market and JREIT prices in March, and keeping them soft for months afterwards.
Historically, January and February are the busiest months, for a variety of reasons.
From 2015-2020, on average, there have been ~7 offerings from the top 40 JREITs announced within the first two months of the calendar year accounting for roughly a third of the total number of offerings in each year during that period. 









Source: Quiddity, Capital IQ (Data)
In this insight, we take a look at the prospective candidates who are most likely to launch follow-on equity offerings near-term, and we look at the performance characteristics of J-REIT follow-on offerings and the likelihood of profit from participating in the event.

J-REIT Offering Primer: Get Ready for Offering Season 2021

Japan

Japan Prime Realty Investment Corporation is a real estate investment trust (REIT) which mainly invests in office buildings and commercial-use facilities nationwide.

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Japan Prime Realty Investmen (8955 JP)

Daiwa House REIT Investment (8984 JP): Expect A Correction Before Pricing Date

Large cap diversified JREIT Daiwa House REIT launched an equity offering to partially fund their recent acquisition of properties. The offering...

Janaghan Jeyakumar, CFA

SGX Nikkei ESG-REIT Index Futures Launch Is an Ideal Backdrop for an Important Topic: ESG and REITs

Singapore Exchange just launched the SGX Nikkei ESG-REIT Index futures contract. A multi-win for SGX, but it also serves as a reminder of how...

Kyle Rudden

Asia Shorts: Meituan, JDH, Smoore, Ping An, Kirin, NTT, Toshiba, HMM, Doosan, LGD, Hanwha, Evergreen

The Insight looks at large short interest movements across HK, Japan, Korea and Taiwan stocks and highlights large increases/decreases in shorts to...

Brian Freitas

Defensives Are Worth A Look; Hang Seng, Shanghai Comp, Nikkei 225, STOXX 50 Support Levels Holding

A review of major global indexes reveals an absence of major breakdowns. We highlight opportunities within defensive Sectors (Real Estate, Consumer...

Vermilion Research

J-REIT Offering Primer: Get Ready for Offering Season 2021

JREIT Follow-On Offerings - A Primer: January and February are the busiest times of the year for a variety of reasons and there are multiple...

Janaghan Jeyakumar, CFA

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