'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Thematic (Sector/Industry)

<p style="text-align: center;"><strong>• RELATIVE PRICE SCORE OUTLIERS •</strong></p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/183/304/original/2021-01-18_07-21-17.png?1611015356" class="editor-image img-responsive" data-smartkarma-image-id="183304"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/183/305/original/2021-01-19_09-18-35.png?1611015525" class="editor-image img-responsive" data-smartkarma-image-id="183305"></figure><div class="content-caption">Source for all charts &amp; tables: Japan Analytics</div></section><p><strong>POLES APART</strong><strong>&amp; ECHOES OF 2000</strong>- As the Japanese equity market continues to rise the 'spread' between the percentage of listed companies that are OverSold (Relative Price Score &lt;-2.0) and those that are OverBought (RPS &gt; 4.0) remains at extreme levels as does the spread in terms of market weight. 7.2% of listed companies are Oversold; while 2.2% are OverBought, but the latter account for 13.7% of market value; the former just 5.4%. The last time both pairs of metrics were at these levels was the 2000 technology bubble.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/183/321/original/2021-01-19_10-25-51.png?1611019564" class="editor-image img-responsive" data-smartkarma-image-id="183321"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/183/323/original/2021-01-19_10-27-10.png?1611019660" class="editor-image img-responsive" data-smartkarma-image-id="183323"></figure></section><p><strong>BLOW OUT</strong> - As was the case in 2000, the total number of Sectors either OverBought or Oversold is also at an extreme level having peaked at 13 in December. This number has been exceeded only twice in the last fifty years  - in December 1999 (16) and February 2000 (14).   </p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/183/363/original/2021-01-19_12-45-46.png?1611027961" class="editor-image img-responsive" data-smartkarma-image-id="183363"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/183/367/original/2021-01-19_13-09-06.png?1611029374" class="editor-image img-responsive" data-smartkarma-image-id="183367"></figure></section><div><p>In the<strong> DETAIL</strong> section below, we provide an update on  Sector, Peer Group and individual company Relative Price Score trends and outliers and make some stock-specific recommendations.</p></div><div><div><div class="content-highlight"><p><strong>THE JAPAN ANALYTICS RELATIVE PRICE SCORE</strong> -  The Relative Price Score (RPS) is a measure of price performance relative to TOPIX calculated by comparing the current deviation with the mean absolute deviation of monthly and daily relative share prices over the last 28 years and 24 months, respectively. As all companies on a comparable scale, 'Overbought' and 'Oversold' outliers and short-term changes in scoring can offer some trading opportunities. The data for all 3,919 currently-listed Companies is cap-weight-aggregated into Relative Price Scores for our 328 Peer Groups and 30 Sectors. The Overbought and Oversold outlier 'thresholds are set' at +4 &amp; -2 for Companies, +3 &amp; -1.5 for Peer Groups and +2 and -1 for Sectors, respectively. These thresholds equate with the top and bottom percentiles of over 3.2 million observations.</p></div></div></div>

• RELATIVE PRICE SCORE OUTLIERS •Source for all charts &amp; tables: Japan AnalyticsPOLES APART&amp; ECHOES OF 2000- As the Japanese equity market continues to rise the 'spread' between the percentage of listed companies that are OverSold (Relative Price Score &lt;-2.0) and those that are OverBought (RPS &gt; 4.0) remains at extreme levels as does the spread in terms of market weight. 7.2% of listed companies are Oversold; while 2.2% are OverBought, but the latter account for 13.7% of market value; the former just 5.4%. The last time both pairs of metrics were at these levels was the 2000 technology bubble.BLOW OUT - As was the case in 2000, the total number of Sectors either OverBought or Oversold is also at an extreme level having peaked at 13 in December. This number has been exceeded only twice in the last fifty years  - in December 1999 (16) and February 2000 (14).   In the DETAIL section below, we provide an update on  Sector, Peer Group and individual company Relative Price Score trends and outliers and make some stock-specific recommendations.THE JAPAN ANALYTICS RELATIVE PRICE SCORE -  The Relative Price Score (RPS) is a measure of price performance relative to TOPIX calculated by comparing the current deviation with the mean absolute deviation of monthly and daily relative share prices over the last 28 years and 24 months, respectively. As all companies on a comparable scale, 'Overbought' and 'Oversold' outliers and short-term changes in scoring can offer some trading opportunities. The data for all 3,919 currently-listed Companies is cap-weight-aggregated into Relative Price Scores for our 328 Peer Groups and 30 Sectors. The Overbought and Oversold outlier 'thresholds are set' at +4 &amp; -2 for Companies, +3 &amp; -1.5 for Peer Groups and +2 and -1 for Sectors, respectively. These thresholds equate with the top and bottom percentiles of over 3.2 million observations.

🇯🇵 JAPAN • January Relative Price Scores -  Actionable Mean Reversion Trades

Japan Specialist

Mark Chadwick

<div><p><span xml:lang="EN-US" data-contrast="none">There has been growing awareness of the business case for inclusion and diversity (I&amp;D) in the workplace. In Japan, Prime Minister Suga has pledged continued government support for corporate governance reform and he would like to see more </span><span xml:lang="EN-US" data-contrast="none">women</span><span xml:lang="EN-US" data-contrast="none"> and foreigners in key positions. While many companies cite I&amp;D as a source of competitive advantage and a key enabler of growth, few academic studies have been able to prove a direct link between I&amp;D and financial performance. Our analysis on Japan’s larger companies suggests the following:</span><span data-ccp-props='{"201341983":0,"335551550":6,"335551620":6,"335559739":160,"335559740":259}'> </span></p></div><div><ol style="list-style-type: decimal;" role="list" start="1"><li role="listitem" data-leveltext="%1." data-font="Calibri" data-listid="1" aria-setsize="-1" data-aria-posinset="1" data-aria-level="1"><p><span xml:lang="EN-US" data-contrast="none">Most Japanese companies have very low levels of diversity. Although the participation of women on the boards of Japanese companies is expanding, those with higher levels of diversity are yet to see any improvement in financial metrics or stock performance. </span><span data-ccp-props='{"201341983":0,"335551550":6,"335551620":6,"335559739":160,"335559740":259}'> </span></p></li></ol></div><div><ol style="list-style-type: decimal;" role="list" start="2"><li role="listitem" data-leveltext="%1." data-font="Calibri" data-listid="1" aria-setsize="-1" data-aria-posinset="2" data-aria-level="1"><p><span xml:lang="EN-US" data-contrast="none">Our broad composite index of board entrenchment also bears little correlation with key metrics. However, boards that are younger on average do appear to be more effective, and are correlated with a broad range of operating metrics. </span><span data-ccp-props='{"201341983":0,"335551550":6,"335551620":6,"335559739":160,"335559740":259}'> </span></p></li></ol></div>

There has been growing awareness of the business case for inclusion and diversity (I&amp;D) in the workplace. In Japan, Prime Minister Suga has pledged continued government support for corporate governance reform and he would like to see more women and foreigners in key positions. While many companies cite I&amp;D as a source of competitive advantage and a key enabler of growth, few academic studies have been able to prove a direct link between I&amp;D and financial performance. Our analysis on Japan’s larger companies suggests the following: Most Japanese companies have very low levels of diversity. Although the participation of women on the boards of Japanese companies is expanding, those with higher levels of diversity are yet to see any improvement in financial metrics or stock performance.  Our broad composite index of board entrenchment also bears little correlation with key metrics. However, boards that are younger on average do appear to be more effective, and are correlated with a broad range of operating metrics.  

Asia Pac ECM and Index Rebal, Shenton Research

Ke Yan, CFA, FRM

Asia Pac ECM and Index Rebal

Asia Pac IPO & Placement Research, China Biotech

DZT Research

DZT Research is an independent Asia Pacific equity specialist. Our quantitative research covers index rebalancing flows, alongside exchange data analytics accross Asia Pacific. On the equity capital markets side, we focus on Asia Pacific ECM, especially biotech and TMT. Our lead analyst is frequently cited by international media.

Index Rebalance

<ul>
<li>MSCI Japan June 2026 added 3 stocks and deleted 14. With the first implementation week complete, we review current-cycle performance vs history.</li>
<li>ADDs gave back after a positive bridge. All 3 ADDs fell in WI0-4, with aggregate return of -9.0% vs the historical ADD mean of -2.9%.</li>
<li>DELETEs rose +3.4% in WI0-4, the strongest first-week result in the study history. Low-velocity DELETEs also rose, returning +2.6% across 4 names with data.</li>
</ul>


MSCI Japan June 2026 added 3 stocks and deleted 14. With the first implementation week complete, we review current-cycle performance vs history.
ADDs gave back after a positive bridge. All 3 ADDs fell in WI0-4, with aggregate return of -9.0% vs the historical ADD mean of -2.9%.
DELETEs rose +3.4% in WI0-4, the strongest first-week result in the study history. Low-velocity DELETEs also rose, returning +2.6% across 4 names with data.


MS-Japan June 2026 Rebalance: Post-Implementation Review

<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/175/082/original/2020-11-30_05-30-46.png?1606681863" class="editor-image img-responsive" data-smartkarma-image-id="175082"></figure></section><div class="content-caption">Source for all charts &amp; tables: Japan Analytics </div><p><strong>FOUR QUADRANTS</strong> - By combining our two scoring methodologies - the Relative Price Score (RPS) and the Results &amp; Revision Score (RRS), we can assign companies into four quadrants:-</p><ul style="list-style-type: disc;">
<li>
<strong>CONTRARIAN BUYS </strong>- Companies with low Results &amp; Revision and Relative Price Scores</li>
<li>
<strong>CONTRARIAN SELLS</strong> - Companies with high Results &amp; Revision and Relative Price Scores</li>
<li>
<strong>TURNAROUNDS</strong> - Companies with high Results &amp; Revision Scores &amp; low Relative Price Scores</li>
<li>
<strong>EX-GROWTH</strong> - Companies with low Results &amp; Revision Scores &amp; high Relative Price Scores</li>
</ul><p>In the two Contrarian quadrants and especially for Contrarian Sells, companies can remain outliers for extended periods; however profitable Contrarian Sells in the last year have been <a href="https://www.smartkarma.com/entities/taiyo-nippon-sanso-corp" target="_blank" data-smartkarma-citation="entities:15756:1" rel="noopener">Nippon Sanso (4091 JP)</a> and <a href="https://www.smartkarma.com/entities/sekisui-house-ltd" target="_blank" data-smartkarma-citation="entities:4508:1" rel="noopener">Sekisui House (1928 JP)</a>. </p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/174/185/original/2020-11-26_08-13-23.png?1606346017" class="editor-image img-responsive" data-smartkarma-image-id="174185"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/174/187/original/2020-11-26_08-18-21.png?1606346313" class="editor-image img-responsive" data-smartkarma-image-id="174187"></figure></section><p><strong><a href="https://www.dropbox.com/s/7b61jl02dh0pzno/2020-11-25_12-43-55.png?dl=0" target="_blank" rel="noopener">CONTRARIAN SELLS</a></strong>- In the<strong> DETAIL</strong> below, we shall review the current 'crop' of Contrarian Sells for potential opportunities. Subsequent Insights in this mini-series will look at the Turnarounds and Ex-Growth quadrants before concluding with one '2021 High Conviction' recommendation. The first Insight in the Series can be found here - <a href="https://www.smartkarma.com/insights/japan-four-quadrants-contrarian-buys" target="_blank" data-smartkarma-citation="insights:45688" rel="noopener">Contrarian Buys</a>.</p>

Source for all charts &amp; tables: Japan Analytics FOUR QUADRANTS - By combining our two scoring methodologies - the Relative Price Score (RPS) and the Results &amp; Revision Score (RRS), we can assign companies into four quadrants:-

CONTRARIAN BUYS - Companies with low Results &amp; Revision and Relative Price Scores

CONTRARIAN SELLS - Companies with high Results &amp; Revision and Relative Price Scores

TURNAROUNDS - Companies with high Results &amp; Revision Scores &amp; low Relative Price Scores

EX-GROWTH - Companies with low Results &amp; Revision Scores &amp; high Relative Price Scores
In the two Contrarian quadrants and especially for Contrarian Sells, companies can remain outliers for extended periods; however profitable Contrarian Sells in the last year have been Nippon Sanso (4091 JP) and Sekisui House (1928 JP). CONTRARIAN SELLS- In the DETAIL below, we shall review the current 'crop' of Contrarian Sells for potential opportunities. Subsequent Insights in this mini-series will look at the Turnarounds and Ex-Growth quadrants before concluding with one '2021 High Conviction' recommendation. The first Insight in the Series can be found here - Contrarian Buys.

🇯🇵 JAPAN • Four Quadrants - Contrarian Sells

<p style="text-align: center;"><strong>• FORWARD NET INCOME &lt;¥20 TRILLION •</strong></p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/168/639/original/2020-11-01_11-41-42.png?1604198522" class="editor-image img-responsive" data-smartkarma-image-id="168639"></figure><div class="content-caption">Source for all charts &amp; tables: Japan Analytics</div></section><p><strong>&lt;¥20T</strong> - Aggregate earnings for Japan's listed companies are in their eighth successive quarter of decline. Forecast net income for the year ended December-to-March is now below ¥20 trillion and 60% lower than the 2019 peak of ¥48.5 trillion.  Despite the recent correction, the forward market multiple is at a new post-GFC high. On a more optimistic note, for many larger capitalisation companies, there has been a quarter-on-quarter improvement in sales and operating income although the year-on-year changes are still negative. As a result, our momentum-based Results Score and Forecast/Revision Score have both turned upwards.</p><section class="figure"><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/168/640/original/2020-11-01_13-06-28.png?1604203602" class="editor-image img-responsive" data-smartkarma-image-id="168640"></figure></section><p><strong>CAVEATS</strong> - Curbing any enthusiasm embedded in the previous sentence, would however note:-</p>
<ul>
<li>The upturn in momentum is concentrated mainly in large-cap companies which are over-represented in our data series due to cap-weighting. Significant cost-cutting has helped improve margins but has also reduced the revenues of smaller companies further down the supply chain. This divergence will be covered in an upcoming Insight.</li>
<li>The resurgence of COVID-19 and the daily new peaks in confirmed cases has not yet spread to Japan. However, with much of Europe re-entering 'lockdown', we expect the current quarter will not repeat the upturn seen in the second, and therefore, many companies will not meet their full-year targets many of which were recently revised up.</li>
<li>As a result of central bank liquidity creation, much of the recovery in earning that will occur over the next several years has already been discounted in share prices. Although the policy prescriptions that we noted in<a href="https://www.smartkarma.com/insights/japan-in-the-suga-era-policy-priorities-suga-stocks" target="_blank" data-smartkarma-citation="insights:43773" rel="noopener"> Japan in the Suga Era</a> will benefit many areas of the economy, Japan remains overweighted in industries that face significant disruption and disintermediation.</li>
</ul>
<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/168/670/original/2020-11-01_14-52-47.png?1604209987" class="editor-image img-responsive" data-smartkarma-image-id="168670"></figure></section><section class="figure"></section><p><strong>BoJ</strong> -  Although the amounts are 30% smaller, this week was the first time since the second week of May that the Bank of Japan has purchased ETFs three days in a row. Despite growing <a href="http://www.asahi.com/ajw/articles/13863217" target="_blank" rel="noopener">attention</a> being paid to the scale and breadth of public sector ownership of Japanese equities, BoJ Governor Kuroda has PM Suga's support for continued interventions. We expect the cumulative total purchases to reach 6% of Total Market Value before the end of the fiscal year. </p></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/168/672/original/2020-11-01_15-05-07.png?1604210720" class="editor-image img-responsive" data-smartkarma-image-id="168672"></figure></section><hr><p style="text-align: center;"><strong>• MARKET TECHNICALS •</strong></p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/168/678/original/2020-11-01_15-15-20.png?1604211336" class="editor-image img-responsive" data-smartkarma-image-id="168678"></figure></section><p><strong>14-DAY RSI</strong> - The Relative Strength Index is close to a new eight-month low but is yet to reach the 'buying-zone' of less than 25.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/168/681/original/2020-11-01_15-58-15.png?1604213912" class="editor-image img-responsive" data-smartkarma-image-id="168681"></figure></section><p><strong>25-DAY TORAKU</strong> - This advance/decline indicator is suggesting that a selling climax is likely to occur this month. Panic lows are at levels below 70 - the COVID-19 low of 45 was the lowest level in over twenty years.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/168/682/original/2020-11-01_16-09-21.png?1604214610" class="editor-image img-responsive" data-smartkarma-image-id="168682"></figure></section><p><strong>HIGH-LOW %</strong> - Having only just turned negative, this ratio is a long way from the 10-15% level needed to form a buy signal.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/168/683/original/2020-11-01_16-12-30.png?1604214765" class="editor-image img-responsive" data-smartkarma-image-id="168683"></figure></section><p><strong>MCCLELLAN SUMMATION</strong> - Similarly, the McClellan A/D Summation is neutral and well above the -4,000 buying zone.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/168/684/original/2020-11-01_16-15-15.png?1604214933" class="editor-image img-responsive" data-smartkarma-image-id="168684"></figure></section><p><a href="https://www.dropbox.com/s/kwe54zk9yrxmtan/2020-11-01_16-15-15.png?dl=0" target="_blank" rel="noopener">MOVING AVERAGES</a> -  Lastly, the Total Market Value is approaching the support level of the 200-Day moving average. If breached, a 50-Day/200-Day negative crossover is likely, extending this correction to below ¥600 trillion.</p><hr><p style="text-align: center;"><strong>• SECTOR RESULTS &amp; REVISION SCORES TIMELINE •</strong></p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/168/686/original/2020-11-01_16-26-10.png?1604215582" class="editor-image img-responsive" data-smartkarma-image-id="168686"></figure></section><section class="figure"></section><p><strong>TIMELINE</strong> - The results 'season' is now in full 'swing'. To date, the Sectors with the strongest earnings momentum are <strong>Machinery</strong>, <strong>Retail</strong>,<strong> Electrical Equipmen</strong>t, and <strong>Other Materials</strong>. The weakest are <strong>Other Commerical Products</strong>,<strong> Information Technology</strong>, <strong>Real Estate</strong>, and <strong>Energy</strong>. Only four Sectors have a positive Score, lead by<strong> Internet Content &amp; Services</strong>. </p><hr><p style="text-align: center;"><strong>• BEST &amp; WORST •</strong></p><div><p>Our best and worst pairings from Friday's announcements are <a href="https://www.smartkarma.com/entities/m3-inc" target="_blank" data-smartkarma-citation="entities:13316:1" rel="noopener">M3 Inc (2413 JP)</a> and <a href="https://www.smartkarma.com/entities/lasertec-corp" target="_blank" data-smartkarma-citation="entities:4126:1" rel="noopener">Lasertec (6920 JP)</a> for the best and <a href="https://www.smartkarma.com/entities/pola-orbis-holdings-inc" target="_blank" data-smartkarma-citation="entities:2287:1" rel="noopener">Pola Orbis (4927 JP)</a> and <a href="https://www.smartkarma.com/entities/mitsui-co-ltd" target="_blank" data-smartkarma-citation="entities:20799:1" rel="noopener">Mitsui (8031 JP)</a> for the worst. </p></div><section class="figure"><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/168/688/original/2020-11-01_16-47-56.png?1604216889" class="editor-image img-responsive" data-smartkarma-image-id="168688"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/168/689/original/2020-11-01_16-53-04.png?1604217196" class="editor-image img-responsive" data-smartkarma-image-id="168689"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/168/690/original/2020-11-01_16-58-22.png?1604217564" class="editor-image img-responsive" data-smartkarma-image-id="168690"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/168/691/original/2020-11-01_16-59-54.png?1604217609" class="editor-image img-responsive" data-smartkarma-image-id="168691"></figure></section><div>
<hr>
<p style="text-align: center;"><strong>DAILY STATS</strong></p>
<p style="text-align: left;">Results are evenly split between positive and neutral, however, TTM revenues are still falling by 5% and operating margins are on average 1.5 points lower. 60% of annual revisions are negative and the average change in score is a decline of 4 points.</p>
</div>
<hr>
<div><p style="text-align: center;"><strong>407 Quarterly Results</strong></p></div>
<div><ul style="list-style-type: disc;">
<li><p><strong>Results Score:</strong> 42% Positive / 6% Neutral / 42% Negative</p></li>
<li><p><strong>Average Results Score Change:</strong> -1.2 points</p></li>
<li><p><strong>Average % Change in Revenue:</strong> -7.9% Quarter YoY / -5.2% Rolling TTM YoY </p></li>
<li><p><strong>Average Operating Profit Margin Change</strong>: -1.5ppt</p></li>
<li><p><strong>Percentage Making Quarterly Losses:</strong> 20%</p></li>
</ul></div>
<hr>
<div><p style="text-align: center;"><strong>197 Annual • 45 Interim Forecasts/Revisions</strong></p></div>
<div><ul style="list-style-type: disc;">
<li><p><strong>Annual Forecast/Revision Score:</strong> 31% Positive / 9% Neutral / 59% Negative</p></li>
<li><p><strong>Interim Forecast/Revision Score Change:</strong> 47% Positive / 11% Neutral / 42% Negative</p></li>
<li><p><strong>Average Forecast/Revision Score Change:</strong> -4.0 points</p></li>
</ul></div></section>

• FORWARD NET INCOME &lt;¥20 TRILLION •Source for all charts &amp; tables: Japan Analytics&lt;¥20T - Aggregate earnings for Japan's listed companies are in their eighth successive quarter of decline. Forecast net income for the year ended December-to-March is now below ¥20 trillion and 60% lower than the 2019 peak of ¥48.5 trillion.  Despite the recent correction, the forward market multiple is at a new post-GFC high. On a more optimistic note, for many larger capitalisation companies, there has been a quarter-on-quarter improvement in sales and operating income although the year-on-year changes are still negative. As a result, our momentum-based Results Score and Forecast/Revision Score have both turned upwards.CAVEATS - Curbing any enthusiasm embedded in the previous sentence, would however note:-

The upturn in momentum is concentrated mainly in large-cap companies which are over-represented in our data series due to cap-weighting. Significant cost-cutting has helped improve margins but has also reduced the revenues of smaller companies further down the supply chain. This divergence will be covered in an upcoming Insight.
The resurgence of COVID-19 and the daily new peaks in confirmed cases has not yet spread to Japan. However, with much of Europe re-entering 'lockdown', we expect the current quarter will not repeat the upturn seen in the second, and therefore, many companies will not meet their full-year targets many of which were recently revised up.
As a result of central bank liquidity creation, much of the recovery in earning that will occur over the next several years has already been discounted in share prices. Although the policy prescriptions that we noted in Japan in the Suga Era will benefit many areas of the economy, Japan remains overweighted in industries that face significant disruption and disintermediation.

BoJ -  Although the amounts are 30% smaller, this week was the first time since the second week of May that the Bank of Japan has purchased ETFs three days in a row. Despite growing attention being paid to the scale and breadth of public sector ownership of Japanese equities, BoJ Governor Kuroda has PM Suga's support for continued interventions. We expect the cumulative total purchases to reach 6% of Total Market Value before the end of the fiscal year. • MARKET TECHNICALS •14-DAY RSI - The Relative Strength Index is close to a new eight-month low but is yet to reach the 'buying-zone' of less than 25.25-DAY TORAKU - This advance/decline indicator is suggesting that a selling climax is likely to occur this month. Panic lows are at levels below 70 - the COVID-19 low of 45 was the lowest level in over twenty years.HIGH-LOW % - Having only just turned negative, this ratio is a long way from the 10-15% level needed to form a buy signal.MCCLELLAN SUMMATION - Similarly, the McClellan A/D Summation is neutral and well above the -4,000 buying zone.MOVING AVERAGES -  Lastly, the Total Market Value is approaching the support level of the 200-Day moving average. If breached, a 50-Day/200-Day negative crossover is likely, extending this correction to below ¥600 trillion.• SECTOR RESULTS &amp; REVISION SCORES TIMELINE •TIMELINE - The results 'season' is now in full 'swing'. To date, the Sectors with the strongest earnings momentum are Machinery, Retail, Electrical Equipment, and Other Materials. The weakest are Other Commerical Products, Information Technology, Real Estate, and Energy. Only four Sectors have a positive Score, lead by Internet Content &amp; Services. • BEST &amp; WORST •Our best and worst pairings from Friday's announcements are M3 Inc (2413 JP) and Lasertec (6920 JP) for the best and Pola Orbis (4927 JP) and Mitsui (8031 JP) for the worst. 

DAILY STATS
Results are evenly split between positive and neutral, however, TTM revenues are still falling by 5% and operating margins are on average 1.5 points lower. 60% of annual revisions are negative and the average change in score is a decline of 4 points.


407 Quarterly Results

Results Score: 42% Positive / 6% Neutral / 42% Negative
Average Results Score Change: -1.2 points
Average % Change in Revenue: -7.9% Quarter YoY / -5.2% Rolling TTM YoY 
Average Operating Profit Margin Change: -1.5ppt
Percentage Making Quarterly Losses: 20%


197 Annual • 45 Interim Forecasts/Revisions

Annual Forecast/Revision Score: 31% Positive / 9% Neutral / 59% Negative
Interim Forecast/Revision Score Change: 47% Positive / 11% Neutral / 42% Negative
Average Forecast/Revision Score Change: -4.0 points


🇯🇵 JAPAN • Market Update & Results & Revisions 10/​​​​​​​​​​​​​​​​​​​​​30

Japan

M3, Inc. supplies medical information services for doctors through the Internet. The Company also supports marketing of pharmaceutical companies and medical equipment manufacturers.

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M3 Inc (2413 JP)

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52-week Range

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