Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

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.

Event-Driven

<ul>
<li>A positive earnings surprise for Fast Retailing and Microsoft’s acquisition of Activision Blizzard hitting Sony have hurt the performance of our skew trade. </li>
<li>Despite this, the dramatic fall in the Nikkei means it is now outperforming the Nikkei since we first suggested the trade. </li>
<li>Looking forward we expect recent volatility to be absorbed over time and we retain conviction on our picks.</li>
</ul>


A positive earnings surprise for Fast Retailing and Microsoft’s acquisition of Activision Blizzard hitting Sony have hurt the performance of our skew trade. 
Despite this, the dramatic fall in the Nikkei means it is now outperforming the Nikkei since we first suggested the trade. 
Looking forward we expect recent volatility to be absorbed over time and we retain conviction on our picks.


TOPIX-Nikkei Skew Trade Hit by Sony and Fast Retailing but Outperforming Nikkei

<ul>
<li>We update on our TOPIX-Nikkei Skew Trade again as we head into the end of the year with markets remaining choppy.</li>
<li>Given likely drops in liquidity but continued choppiness in markets we feel that liquidity risk will be important over the next 2-3 weeks. </li>
<li>Given that, we quite like the risk-reward skew on offer here.</li>
</ul>


We update on our TOPIX-Nikkei Skew Trade again as we head into the end of the year with markets remaining choppy.
Given likely drops in liquidity but continued choppiness in markets we feel that liquidity risk will be important over the next 2-3 weeks. 
Given that, we quite like the risk-reward skew on offer here.


We Like the TOPIX-Nikkei Skew Trade Into End of Year Liquidity Drops

<ul>
<li>At the beginning of the month, we suggested that setting up trades based on TOPIX outperforming Nikkei looked interesting. </li>
<li>This skew trade has a slight inherent short bias as Nikkei is more growth skewed but it has nevertheless generated a positive return. </li>
<li>That is despite Nikkei rising 3.8% since we published our initial note.</li>
</ul>


At the beginning of the month, we suggested that setting up trades based on TOPIX outperforming Nikkei looked interesting. 
This skew trade has a slight inherent short bias as Nikkei is more growth skewed but it has nevertheless generated a positive return. 
That is despite Nikkei rising 3.8% since we published our initial note.


Checking in on the Topix-Nikkei Skew Trade

<ul>
<li>Early last year as COVID was breaking and the BOJ doubled its ETF purchases shifting to TOPIX ETFs from Nikkei ETFs we brought up this trade. </li>
<li>With a long weekend adding to the mix conditions were abnormal but our suggested trades generated 10-12% pure alpha within four trading days. </li>
<li>This trade is starting to look interesting to us again though returns are likely to be less explosive but more persistent this time.</li>
</ul>


Early last year as COVID was breaking and the BOJ doubled its ETF purchases shifting to TOPIX ETFs from Nikkei ETFs we brought up this trade. 
With a long weekend adding to the mix conditions were abnormal but our suggested trades generated 10-12% pure alpha within four trading days. 
This trade is starting to look interesting to us again though returns are likely to be less explosive but more persistent this time.


Equity Bottom-Up

<p>Mitsubishi Motors 2QFY22 results were strong with revenues of ¥459bn (+6.2% QoQ, +32.8% YoY) and operating profit of ¥14.6bn (3.2% OPM compared to the 2.5% OPM of 1QFY22). Guidance was revised up to ¥60bn, just below our ¥65bn call from last quarter.</p>

Mitsubishi Motors 2QFY22 results were strong with revenues of ¥459bn (+6.2% QoQ, +32.8% YoY) and operating profit of ¥14.6bn (3.2% OPM compared to the 2.5% OPM of 1QFY22). Guidance was revised up to ¥60bn, just below our ¥65bn call from last quarter.

Japan

MITSUBISHI MOTORS CORPORATION develops and manufactures passenger cars and its related parts.  The Company has production facilities in Japan, the US, and Thailand.  Mitsubishi Motors Corp provides vehicle-related financing and leasing service through its subsidiary.

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Mitsubishi Motors (7211 JP)

TOPIX-Nikkei Skew Trade Hit by Sony and Fast Retailing but Outperforming Nikkei

Volatility in Fast Retailing and Sony have hurt the performance of our skew trade but looking forward we expect recent volatility to be absorbed...

Mio Kato

We Like the TOPIX-Nikkei Skew Trade Into End of Year Liquidity Drops

Given likely drops in liquidity but continued choppiness in markets we feel that liquidity risk will be important over the next 2-3 weeks. Given...

Mio Kato

Checking in on the Topix-Nikkei Skew Trade

Our TOPIX-Nikkei skew trade has a slight inherent short bias as Nikkei is more growth skewed but it has nevertheless generated a positive return...

Mio Kato

Revisiting the Topix-Nikkei Skew Trade

Early last year we suggested trading this skew which would have generated 10-12% pure alpha within four trading days. This trade is starting to...

Mio Kato

Mitsubishi Motors – Recovery Continues

Mitsubishi Motors 2QFY22 results were strong and guidance was revised up to ¥60bn, just below our ¥65bn call from last quarter.

Mio Kato

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