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>This is now the third Int'l Compass/third week in a row where we are discussing an increasing number of country indexes experiencing bullish 3.5-9-month downtrend reversals.</li>
<li>Importantly, all of the previously mentioned indexes are holding above their breakout levels (i.e., there has yet to be any failed breakouts).</li>
<li>Now, the U.S. dollar (DXY) is starting to show early signs of topping. We continue to believe that global equities are going through a bottoming process.</li>
</ul>


This is now the third Int'l Compass/third week in a row where we are discussing an increasing number of country indexes experiencing bullish 3.5-9-month downtrend reversals.
Importantly, all of the previously mentioned indexes are holding above their breakout levels (i.e., there has yet to be any failed breakouts).
Now, the U.S. dollar (DXY) is starting to show early signs of topping. We continue to believe that global equities are going through a bottoming process.


U.S. Dollar Topping?; Bullish Reversals Continue; Ideas in Growth/Cyclicals, Financials

<ul>
<li>Last week we noted that the bullish reversals had begun, with the MSCI ACWI (ACWI-US), STOXX Europe 50, and SPX the first few to reverse topside their 4-month downtrends.</li>
<li>As we discuss below, bullish reversals are proliferating globally, something that continues to support our belief that global equities are bottoming.</li>
<li>Global growth Sectors continue to gain momentum and have emerged as leadership -- overweight growth. Sectors covered today include Technology, Consumer Discretionary, and Industrials -- add exposure</li>
</ul>


Last week we noted that the bullish reversals had begun, with the MSCI ACWI (ACWI-US), STOXX Europe 50, and SPX the first few to reverse topside their 4-month downtrends.
As we discuss below, bullish reversals are proliferating globally, something that continues to support our belief that global equities are bottoming.
Global growth Sectors continue to gain momentum and have emerged as leadership -- overweight growth. Sectors covered today include Technology, Consumer Discretionary, and Industrials -- add exposure


Bullish Reversals Proliferate; Stick With Growth; Buy Ideas in Tech, Discretionary, & Industrials

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/kintetsu-group-holdings-co-l" target="_blank" data-smartkarma-citation="entities:18507:1" rel="noopener">Kintetsu Group Holdings Co L (9041 JP)</a> has announced a Tender Offer to acquire the shares in <a href="https://www.smartkarma.com/entities/kintetsu-world-express-inc" target="_blank" data-smartkarma-citation="entities:11710:1" rel="noopener">Kintetsu World Express (9375 JP)</a> that it doesn't hold (it controls 47%)</li>
<li>This is not a done deal, but they only need about 20% of the remaining 53%. </li>
<li>At a 40% premium to last after a great year, this is still being done at the wrong price. But it will likely get done</li>
</ul>



Kintetsu Group Holdings Co L (9041 JP) has announced a Tender Offer to acquire the shares in Kintetsu World Express (9375 JP) that it doesn't hold (it controls 47%)
This is not a done deal, but they only need about 20% of the remaining 53%. 
At a 40% premium to last after a great year, this is still being done at the wrong price. But it will likely get done


Kintetsu World Express (9375 JP) Tender Offer by Parent - Too Cheap But Tough To Block

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

At its Monetary Policy Meeting that concluded on 19 March, the Bank of Japan (BOJ) announced that they would purchase ETFs and J-REIT as necessary with upper limits of about 12 trillion yen and about 180 billion yen respectively. While the upper limits were originally set as a temporary measure in response to the impact of COVID-19, the Bank will maintain them even after COVID-19 subsides.The big change was the announcement that the BOJ would only purchase ETFs tracking the <a href="https://www.smartkarma.com/entities/tokyo-stock-exchange-tokyo-price-index-topix" target="_blank" data-smartkarma-citation="entities:22910:1" rel="noopener">Tokyo Stock Exchange Tokyo Price Index Topix (TPX INDEX)</a>. This means no more flows to 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> and JPX Nikkei 400 ETFs.From the increase in ETF AUM over calendar year 2020, we estimate that around 88% of the BOJ buying went into <a href="https://www.smartkarma.com/entities/tokyo-stock-exchange-tokyo-price-index-topix" target="_blank" data-smartkarma-citation="entities:22910:1" rel="noopener">Tokyo Stock Exchange Tokyo Price Index Topix (TPX INDEX)</a> ETFs, with smaller amounts going into 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> and JPX Nikkei 400 ETFs.While the impact of BOJ only buying <a href="https://www.smartkarma.com/entities/tokyo-stock-exchange-tokyo-price-index-topix" target="_blank" data-smartkarma-citation="entities:22910:1" rel="noopener">Tokyo Stock Exchange Tokyo Price Index Topix (TPX INDEX)</a> linked ETFs is not material for single stocks in ADV terms, there could be a bigger impact on 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> constituents if other NKY ETF holders redeem their units and sell the underlying shares.The NT ratio (NKY/TPX) had started to move lower over the last 15 trading days due to the shift from growth to value stocks. The BOJ announcement could take the ratio lower in the short term on a change in sentiment and short term flows due to repositioning of portfolios.<a href="https://www.smartkarma.com/entities/nissan-chemical-industries" target="_blank" data-smartkarma-citation="entities:4102:1" rel="noopener">Nissan Chemical Industries (4021 JP)</a>, <a href="https://www.smartkarma.com/entities/comsys-holdings-corp" target="_blank" data-smartkarma-citation="entities:20548:1" rel="noopener">Comsys Holdings (1721 JP)</a>, <a href="https://www.smartkarma.com/entities/konami-holdings-corp" target="_blank" data-smartkarma-citation="entities:13236:1" rel="noopener">Konami Holdings (9766 JP)</a>, <a href="https://www.smartkarma.com/entities/kikkoman-corp" target="_blank" data-smartkarma-citation="entities:11720:1" rel="noopener">Kikkoman Corp (2801 JP)</a> 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> will be among the most negatively affected stocks, but the impact is quite small.<a href="https://www.smartkarma.com/entities/tokyo-stock-exchange-tokyo-price-index-topix" target="_blank" data-smartkarma-citation="entities:22910:1" rel="noopener">Tokyo Stock Exchange Tokyo Price Index Topix (TPX INDEX)</a> stocks (that will have passive BOJ inflows of at least US$5m) that will have the largest impact in terms of ADV to trade are <a href="https://www.smartkarma.com/entities/hankyu-hanshin-holdings-inc" target="_blank" data-smartkarma-citation="entities:13058:1" rel="noopener">Hankyu Hanshin Holdings (9042 JP)</a>, <a href="https://www.smartkarma.com/entities/kintetsu-group-holdings-co-l" target="_blank" data-smartkarma-citation="entities:18507:1" rel="noopener">Kintetsu Group Holdings Co L (9041 JP)</a>, <a href="https://www.smartkarma.com/entities/hisamitsu-pharmaceutical-co" target="_blank" data-smartkarma-citation="entities:17008:1" rel="noopener">Hisamitsu Pharmaceutical Co (4530 JP)</a>, <a href="https://www.smartkarma.com/entities/bank-of-kyoto-ltd" target="_blank" data-smartkarma-citation="entities:5248:1" rel="noopener">Bank Of Kyoto (8369 JP)</a> and <a href="https://www.smartkarma.com/entities/hakuhodo-dy-holdings-inc" target="_blank" data-smartkarma-citation="entities:8736:1" rel="noopener">Hakuhodo Dy Holdings (2433 JP)</a>.

At its Monetary Policy Meeting that concluded on 19 March, the Bank of Japan (BOJ) announced that they would purchase ETFs and J-REIT as necessary with upper limits of about 12 trillion yen and about 180 billion yen respectively. While the upper limits were originally set as a temporary measure in response to the impact of COVID-19, the Bank will maintain them even after COVID-19 subsides.The big change was the announcement that the BOJ would only purchase ETFs tracking the Tokyo Stock Exchange Tokyo Price Index Topix (TPX INDEX). This means no more flows to the Nikkei 225 (NKY INDEX) and JPX Nikkei 400 ETFs.From the increase in ETF AUM over calendar year 2020, we estimate that around 88% of the BOJ buying went into Tokyo Stock Exchange Tokyo Price Index Topix (TPX INDEX) ETFs, with smaller amounts going into the Nikkei 225 (NKY INDEX) and JPX Nikkei 400 ETFs.While the impact of BOJ only buying Tokyo Stock Exchange Tokyo Price Index Topix (TPX INDEX) linked ETFs is not material for single stocks in ADV terms, there could be a bigger impact on the Nikkei 225 (NKY INDEX) constituents if other NKY ETF holders redeem their units and sell the underlying shares.The NT ratio (NKY/TPX) had started to move lower over the last 15 trading days due to the shift from growth to value stocks. The BOJ announcement could take the ratio lower in the short term on a change in sentiment and short term flows due to repositioning of portfolios.Nissan Chemical Industries (4021 JP), Comsys Holdings (1721 JP), Konami Holdings (9766 JP), Kikkoman Corp (2801 JP) and Fast Retailing (9983 JP) will be among the most negatively affected stocks, but the impact is quite small.Tokyo Stock Exchange Tokyo Price Index Topix (TPX INDEX) stocks (that will have passive BOJ inflows of at least US$5m) that will have the largest impact in terms of ADV to trade are Hankyu Hanshin Holdings (9042 JP), Kintetsu Group Holdings Co L (9041 JP), Hisamitsu Pharmaceutical Co (4530 JP), Bank Of Kyoto (8369 JP) and Hakuhodo Dy Holdings (2433 JP). 

BOJ Buying to Focus on TOPIX ETFs: Big Headline, Smaller Impact

Expert on Japan Retail and Consumer Markets, JapanConsuming

Michael Causton

Expert on Japan Retail and Consumer Markets

Real Insight on Japanese Consumer Markets

JapanConsuming

JapanConsuming is a specialist research firm producing intelligence on Japanese retail and consumer markets. Founded in 2000, JapanConsuming has become the leading provider of insights on Japanese retailers and consumer trends to retailers, brands, government agencies and investors. As well as a highly regarded monthly report on the market, JapanConsuming produces in-depth reports on retail sectors, seminars on key trends and telephone consulting to investors on trends and retailers.

JapanConsuming was founded by Michael Causton and Roy Larke. 

Equity Bottom-Up

Kintetsu Department Store / Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/kintetsu-department-store-co-ltd" target="_blank" data-smartkarma-citation="entities:9040:1" rel="noopener">Kintetsu Department Store (8244 JP)</a> watched as a seemingly inevitable decline hit its business in the five years to 2018. The railway-backed retailer has realised that there is still plenty of traffic going through its stations and that the problem was the wrong kind of retail offer. To fix this, rather than just call in tenants, Kintetsu became an active franchisee in an experiment that is clearly working. While Kintetsu's share price reflects the weak department store sector, within three years it won't be a department store at all.

Kintetsu Department Store (8244 JP) watched as a seemingly inevitable decline hit its business in the five years to 2018. The railway-backed retailer has realised that there is still plenty of traffic going through its stations and that the problem was the wrong kind of retail offer. To fix this, rather than just call in tenants, Kintetsu became an active franchisee in an experiment that is clearly working. While Kintetsu's share price reflects the weak department store sector, within three years it won't be a department store at all.

Japan

Kintetsu Group Holdings provides passenger rail, bus, taxi, and freight truck transportation services in the Kinki region including Osaka, Kyoto, and Nara prefectures.  The Company also offers ground, air, and marine logistics services and operates department stores and real estate business.

Kintetsu Group Holdings Co L (9041 JP)

U.S. Dollar Topping?; Bullish Reversals Continue; Ideas in Growth/Cyclicals, Financials

This is now the third week in a row where we are discussing an increasing number of country indexes with bullish 3.5-9-month downtrend reversals,...

Vermilion Research

Bullish Reversals Proliferate; Stick With Growth; Buy Ideas in Tech, Discretionary, & Industrials

Bullish reversals begun last week in $ACWI, $SPX, and $STOXX Europe 50, with each reversing topside their 4-month downtrends. Now, bullish...

Vermilion Research

Kintetsu World Express (9375 JP) Tender Offer by Parent - Too Cheap But Tough To Block

Kintetsu Tender for Kintetsu World Express (9375) is yet another parent company buyout of its sub which is too cheap, but it will be tough to block.

Travis Lundy

BOJ Buying to Focus on TOPIX ETFs: Big Headline, Smaller Impact

The BOJ will only buy ETFs linked to the TOPIX going forward. While this makes for a big headline, the impact on the stocks is much more muted....

Brian Freitas

Kintetsu the Franchisee

Kintetsu looks like another retailer in a failing sector but it is owned by one of the busiest railway operators in the country with great retail...

Michael Causton