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>
<a href="https://www.smartkarma.com/entities/mercari-inc" target="_blank" data-smartkarma-citation="entities:27149:1" rel="noopener">Mercari Inc (4385 JP)</a> will be added to 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> at the close on 28 July.</li>
<li>There are a lot of FFW changes, mainly reductions. This leads to large funding inflows on the large index stocks.</li>
<li>We estimate the inclusion of Mercari and the FFW changes will lead to a one-way turnover of 0.56% leading to a one-way trade of JPY 442.23bn (US$3.25bn).</li>
</ul>



Mercari Inc (4385 JP) will be added to the Tokyo Stock Exchange Tokyo Price Index Topix (TPX INDEX) at the close on 28 July.
There are a lot of FFW changes, mainly reductions. This leads to large funding inflows on the large index stocks.
We estimate the inclusion of Mercari and the FFW changes will lead to a one-way turnover of 0.56% leading to a one-way trade of JPY 442.23bn (US$3.25bn).


TOPIX July Rebalance: Mercari Inclusion, FFW Changes, US$6.5bn To Trade

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>The July-end TOPIX FFW Rebalance is larger than most expected, I believe. </li>
<li>There should be US$3.5bn one-way, with only a couple of major buy names.</li>
<li>
<a href="https://www.smartkarma.com/entities/chugai-pharmaceutical-co-ltd" target="_blank" data-smartkarma-citation="entities:4489:1" rel="noopener">Chugai Pharmaceutical (4519 JP)</a>, <a href="https://www.smartkarma.com/entities/canon-inc" target="_blank" data-smartkarma-citation="entities:1:1" rel="noopener">Canon Inc (7751 JP)</a>, <a href="https://www.smartkarma.com/entities/unicharm-corp" target="_blank" data-smartkarma-citation="entities:6246:1" rel="noopener">Unicharm Corp (8113 JP)</a>, <a href="https://www.smartkarma.com/entities/kubota-corp" target="_blank" data-smartkarma-citation="entities:12926:1" rel="noopener">Kubota Corp (6326 JP)</a>, <a href="https://www.smartkarma.com/entities/asahi-group-holdings-ltd" target="_blank" data-smartkarma-citation="entities:10482:1" rel="noopener">Asahi Group Holdings (2502 JP)</a>, and Shiseido (4911) are each US$170mm+ to sell.</li>
</ul>


The July-end TOPIX FFW Rebalance is larger than most expected, I believe. 
There should be US$3.5bn one-way, with only a couple of major buy names.

Chugai Pharmaceutical (4519 JP), Canon Inc (7751 JP), Unicharm Corp (8113 JP), Kubota Corp (6326 JP), Asahi Group Holdings (2502 JP), and Shiseido (4911) are each US$170mm+ to sell.


TOPIX Rebalance: End-July Rebal Is $3.5bn One-Way - Some Big Sell Names

Equity Long-Short Analyst

Pyari Menon

Thematic (Sector/Industry)

<ul>
<li>Higher ag prices should leave farmers with more cash and a higher propensity to spend. Companies making Tech heavy farm machinery and modified seeds with positive traits should benefit. </li>
<li>
<a href="https://www.smartkarma.com/entities/deere-co" target="_blank" data-smartkarma-citation="entities:12207:1" rel="noopener">Deere &amp; Co (DE US)</a> &amp; <a href="https://www.smartkarma.com/entities/cnh-global-nv" target="_blank" data-smartkarma-citation="entities:28200:1" rel="noopener">CNH Global NV (CNH US)</a> dominate innovations in machinery followed by Agco Corp (AGCO US). Dawn Equipment is a small but interesting private player.</li>
<li>In seeds and tissue genetic engineering Corteva Inc (CTVA US) is best positioned and has been out innovating its only real competitor Bayer AG (BAYN GY) significantly in recent years.</li>
</ul>


Higher ag prices should leave farmers with more cash and a higher propensity to spend. Companies making Tech heavy farm machinery and modified seeds with positive traits should benefit. 

Deere &amp; Co (DE US) &amp; CNH Global NV (CNH US) dominate innovations in machinery followed by Agco Corp (AGCO US). Dawn Equipment is a small but interesting private player.
In seeds and tissue genetic engineering Corteva Inc (CTVA US) is best positioned and has been out innovating its only real competitor Bayer AG (BAYN GY) significantly in recent years.


Rising Agri Prices Might Benefit Machinery and Seed Ecosystem. We Highlight the Dominant Innovators

Consumer Analyst / Channel Surveillance Specialist, Trudence Capital Advisors

Pranav Bhavsar

Consumer Analyst / Channel Surveillance Specialist

Trudence Capital Advisors

Trudence Capital Advisors Private Limited is a SEBI-registered Research Analyst, holding SEBI registration number INH000015747. Our firm is dedicated to providing independent and unbiased research on Indian mid to large-cap companies. Trudence Capital is known for its counter-consensus views, with a focus on forensic research and on-ground primary investigations. Our research approach is thorough, involving detailed analysis of accounting practices and governance, alongside extensive channel checks.

Independent & Unbiased Research

Equity Bottom-Up

Escorts Kubota Limited / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/escorts-ltd" target="_blank" data-smartkarma-citation="entities:6773:1" rel="noopener">Escorts Ltd (ESC IN)</a> has been losing market share. As per management, "there are no "big" problems and they will regain the market share", but we do not think so. </li>
<li>Some flash channel checks are suggesting issues with some of the company's products. These issues still remain unaddressed as per some dealers and customers. </li>
<li>While the export opportunity and overall industry dynamics are positive unless the market share is regained, growth is likely to be slower than industry. </li>
</ul>



Escorts Ltd (ESC IN) has been losing market share. As per management, "there are no "big" problems and they will regain the market share", but we do not think so. 
Some flash channel checks are suggesting issues with some of the company's products. These issues still remain unaddressed as per some dealers and customers. 
While the export opportunity and overall industry dynamics are positive unless the market share is regained, growth is likely to be slower than industry. 


Escorts Ltd (ESC IN) | Expected to Grow Slower than Industry

Japan Specialist

Mark Chadwick

<ul>
<li>Kubota's stock declined in sympathy with agricultural major Deere following a quarterly earnings miss</li>
<li>Kubota faces similar supply chain and cost pressures, but it is the US housing market that is a bigger concern</li>
<li>We believe that the market is underestimating the earnings risk for Kubota should the housing market start to cool </li>
</ul>


Kubota's stock declined in sympathy with agricultural major Deere following a quarterly earnings miss
Kubota faces similar supply chain and cost pressures, but it is the US housing market that is a bigger concern
We believe that the market is underestimating the earnings risk for Kubota should the housing market start to cool 


Kubota (6326 JP) | US Housing Risk to Big to Ignore

Japan

KUBOTA CORPORATION manufactures industrial machinery, farm machinery, and fluid piping systems.  The Company's products include ductile iron pipes, engines, tractors, combine harvesters, reaper binders, rice planters, and excavators.  Kubota also produces forged iron products, housing equipment, and environmental control plants.

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Kubota Corp (6326 JP)

TOPIX July Rebalance: Mercari Inclusion, FFW Changes, US$6.5bn To Trade

Mercari will be added to the TPX at the close on 28 July. There are a lot of FFW changes that will result in one-way turnover of 0.56% leading to a...

Brian Freitas

TOPIX Rebalance: End-July Rebal Is $3.5bn One-Way - Some Big Sell Names

The July-end TOPIX rebalance is only have the size of June but that's still big. US$3.5bn a side. There are several large names and lots of names...

Travis Lundy

Rising Agri Prices Might Benefit Machinery and Seed Ecosystem. We Highlight the Dominant Innovators

AgTech innovations will be needed to alleviate the pressures in food system. We identify the leaders in Farm Machinery and Seed Genetics Technologies

Pyari Menon

Escorts Ltd (ESC IN) | Expected to Grow Slower than Industry

The tractor industry is poised well for a recovery. However, we believe Escorts Ltd (ESC IN)'s product issues will lead to its growth being slower...

Pranav Bhavsar

Kubota (6326 JP) | US Housing Risk to Big to Ignore

Supply chain and cost pressures abound, but it is the risk around a cooling US housing market concerns us the most. We think the stock could...

Mark Chadwick

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