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

Index Rebalance

<ul>
<li>
<a href="https://www.smartkarma.com/entities/sanrio-co-ltd" target="_blank" data-smartkarma-citation="entities:16476:1" rel="noopener">Sanrio (8136 JP)</a>'s stock price dropped following the placement announcement in November. Then there was a rally in the stock amid increased volatility.</li>
<li>The placement resulted in an increase in free float and the move higher in the stock could lead to <a href="https://www.smartkarma.com/entities/sanrio-co-ltd" target="_blank" data-smartkarma-citation="entities:16476:1" rel="noopener">Sanrio (8136 JP)</a> being added to a global index in May.</li>
<li>There is positioning in the stock but a lot of that appears to have been taken off in the last month. The stock could move higher depending on global cues.</li>
</ul>



Sanrio (8136 JP)'s stock price dropped following the placement announcement in November. Then there was a rally in the stock amid increased volatility.
The placement resulted in an increase in free float and the move higher in the stock could lead to Sanrio (8136 JP) being added to a global index in May.
There is positioning in the stock but a lot of that appears to have been taken off in the last month. The stock could move higher depending on global cues.


Sanrio (8136 JP): Global Index Inclusion in May

Research and consultancy, Tabbush Report

Daniel Tabbush

Research and consultancy

Tabbush Report

We provide research and consultancy on Asian banks. Our focus is on what we call “Asian bank research, without the noise.” We are interested in the most critical swing-factors for banks, the NPL and credit cycle, and where we believe there is a gap between perception and reality. We often focus on the less studied components of bank financial statements.  Our research is highly thematic, sometimes examining unlisted banks and companies as a window on mainstream banks. 

Being independent allows us to look at smaller banks, often overlooked by others. Analysis of BIS bank guidelines in the context of Asia, is also a focal point, while we also analyze global banks operating in the region. We use what we believe is the most comprehensive, reliable financials database, SNL Financial. S&P Capital IQ augments our database, with corporate data and CEIC, with economics. 

Asian bank research, without the noise.

Thematic (Sector/Industry)

<ul>
<li>Comments today from BOJ suggest we are nearing the end of negative interest rates in Japan, which can mean an immediate boost to net interest income for Japan's banks</li>
<li>Many banks have cash and deposits with the BOJ at high levels, where yields are negative, and this can be the first big positive delta to bank's income</li>
<li>Credit metrics in Japan are improving and loan growth is accelerating, this is generally at odds with other major banking systems, US, UK, Singapore</li>
</ul>


Comments today from BOJ suggest we are nearing the end of negative interest rates in Japan, which can mean an immediate boost to net interest income for Japan's banks
Many banks have cash and deposits with the BOJ at high levels, where yields are negative, and this can be the first big positive delta to bank's income
Credit metrics in Japan are improving and loan growth is accelerating, this is generally at odds with other major banking systems, US, UK, Singapore


Japan Banks - Near End of Negative Rates BOJ, Deposits with BOJ to See Big Yield Rise, Not Only JGBs

<ul>
<li>We look at which Japan banks have the most cash which can see a major boost to returns. </li>
<li>Banks with lower margins can see a higher net interest income pick up from rising rates. </li>
<li>Loan growth in Japan has been relatively strong, supportive of rising rates from BOJ.</li>
</ul>


We look at which Japan banks have the most cash which can see a major boost to returns. 
Banks with lower margins can see a higher net interest income pick up from rising rates. 
Loan growth in Japan has been relatively strong, supportive of rising rates from BOJ.


Japan - Rising Rates: Focus On Banks With High Cash And Low Margins

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>Early this morning, a Nikkei <a href="https://asia.nikkei.com/Business/Business-deals/MUFG-to-launch-takeover-bid-for-robo-adviser-WealthNavi2" target="_blank" rel="noopener">article</a> said <a href="https://www.smartkarma.com/entities/mitsubishi-ufj-financial-group" target="_blank" data-smartkarma-citation="entities:218:1" rel="noopener">Mitsubishi UFJ Financial (MUFG) (8306 JP)</a> would buy out the remaining 85% of <a href="https://www.smartkarma.com/entities/wealthnavi-inc" target="_blank" data-smartkarma-citation="entities:31058:1" rel="noopener">WealthNavi (7342 JP)</a>. Expected to be completed by March.</li>
<li>MUFJ Bank and WealthNavi signed a Business Alliance in February. WealthNavi issued 9.11mm new shares to MUFJ at ¥1,718/share. That was a discount to market and shares are down ~40%.</li>
<li>WealthNavi's AUM is growing (¥1.3trln at end-Oct) and the goal is to launch a money advisory platform by FY2026. Now they need to decide on the premium.</li>
</ul>


Early this morning, a Nikkei article said Mitsubishi UFJ Financial (MUFG) (8306 JP) would buy out the remaining 85% of WealthNavi (7342 JP). Expected to be completed by March.
MUFJ Bank and WealthNavi signed a Business Alliance in February. WealthNavi issued 9.11mm new shares to MUFJ at ¥1,718/share. That was a discount to market and shares are down ~40%.
WealthNavi's AUM is growing (¥1.3trln at end-Oct) and the goal is to launch a money advisory platform by FY2026. Now they need to decide on the premium.


Nikkei: MUFG To Launch TOB on WealthNavi (7342)

<ul>
<li>About 10 days ago I put out a piece saying H1 guidance trends were such that a lot more banks would upgrade guidance before results. </li>
<li>More than two dozen did and the average guidance uplift is VERY high at +59%. The median uplift vs guidance for 35 banks guiding/reporting is +39% for H1. </li>
<li>The big wave of bank earnings is today through late next week. Megas at the end. Stay long banks. Megas. Cheap regionals. </li>
</ul>


About 10 days ago I put out a piece saying H1 guidance trends were such that a lot more banks would upgrade guidance before results. 
More than two dozen did and the average guidance uplift is VERY high at +59%. The median uplift vs guidance for 35 banks guiding/reporting is +39% for H1. 
The big wave of bank earnings is today through late next week. Megas at the end. Stay long banks. Megas. Cheap regionals. 


Japan 2024 H1 Bank Guidance/Results - Better and Better

Japan

Mitsubishi UFJ Financial Group, Inc. (MUFG) is a holding company established through the merger of Mitsubishi Tokyo Financial Group and UFJ Holdings. As a financial group, the Company provides a variety of financial and investment services including commercial banking, trust banking, international finance, and assets management services.

Mitsubishi UFJ Financial (MUFG) (8306 JP)

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Mitsubishi UFJ Financial (MUFG) (8306 JP)

Sanrio (8136 JP): Global Index Inclusion in May

Sanrio's stock price has stalled over the last few weeks and the announcement of inclusion in a global index in the next few weeks could take the...

Brian Freitas

Japan Banks - Near End of Negative Rates BOJ, Deposits with BOJ to See Big Yield Rise, Not Only JGBs

The BOJ finally raised short term rates today from 25bps to 50bps. This is an historic rate rise. Japan's banks can see better income from JGBs,...

Daniel Tabbush

Japan - Rising Rates: Focus On Banks With High Cash And Low Margins

BOJ to meet 23-24 Jan and likely to raise rates possibly by doubling short-term rates, from 0.25% to 0.50%. There are important implications for...

Daniel Tabbush

Nikkei: MUFG To Launch TOB on WealthNavi (7342)

It appears MUFJ Bank is going to buy out the robo-advisory business WealthNavi in which it invested earlier this year. Stock is -38% vs where they...

Travis Lundy

Japan 2024 H1 Bank Guidance/Results - Better and Better

This AM has a Nikkei headline saying Japan's 3 megabanks will report ¥2.0trln in Net Profit in H1. That compares to ¥894bn last year, and ¥3.3trln...

Travis Lundy

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