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/nomura-research-institute-ltd" target="_blank" data-smartkarma-citation="entities:18129:1" rel="noopener">Nomura Research Institute (4307 JP)</a> and <a href="https://www.smartkarma.com/entities/ryohin-keikaku-co-ltd" target="_blank" data-smartkarma-citation="entities:2765:1" rel="noopener">Ryohin Keikaku (7453 JP)</a> will replace <a href="https://www.smartkarma.com/entities/nippon-paper-industries-co-l" target="_blank" data-smartkarma-citation="entities:557:1" rel="noopener">Nippon Paper Industries Co L (3863 JP)</a> and <a href="https://www.smartkarma.com/entities/dic-corp" target="_blank" data-smartkarma-citation="entities:7343:1" rel="noopener">Dic Corp (4631 JP)</a> in 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>. </li>
<li>
<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>'s CPAF will drop from 3 to 2.7 and there will be further selling in March 2025 as the CPAF drops to 2.4 (or possibly even 2.1!) </li>
<li>Passives will need to buy 7-15x ADV (13-14% of real float) in the adds and sell 2.7-6.5x ADV in the deletes. There is a big reverse funding trade too.</li>
</ul>



Nomura Research Institute (4307 JP) and Ryohin Keikaku (7453 JP) will replace Nippon Paper Industries Co L (3863 JP) and Dic Corp (4631 JP) in the Nikkei 225 (NKY INDEX). 

Fast Retailing (9983 JP)'s CPAF will drop from 3 to 2.7 and there will be further selling in March 2025 as the CPAF drops to 2.4 (or possibly even 2.1!) 
Passives will need to buy 7-15x ADV (13-14% of real float) in the adds and sell 2.7-6.5x ADV in the deletes. There is a big reverse funding trade too.


Nikkei 225 Index Rebalance: NRI, Ryohin Keikaku IN; Nippon Paper, DIC OUT; Fast Retailing Capped

Japanese Turnaround Situations, Short-Ideas, Azabu Research

Michael Allen

Japanese Turnaround Situations, Short-Ideas

Azabu Research

Azabu Research is a publishing and consulting firm focused on distressed equities in the Japanese market. We specialize in turnaround strategies, corporate combinations, divestitures, and restructuring.

Publisher of the Tokyo Turnaround Letter, which conducts the most thorough research possible of publicly available information, including forensic tests for fraudulent overstatement of assets and understatement of liabilities, as well as rigorous market and industry analysis to assess the underlying strengths of the company’s products or services, the appropriateness of the company’s turnaround strategy, and the skill of its current management team. The average length of a report exceeds 25 pages of text and tables, excluding any disclosures or executive summaries.

We have more than 30 years of experience in applying this process to distressed equities in Japan. Additionally, subscribers have free access to detailed, yet easily navigated earnings models for the target company as well as the top five comparable companies, and unlimited access to the analyst for follow-up questions.

Azabu Research also conducts be-spoke research on a project basis, and provides consulting services to companies looking to restructure, divest, make acquisitions, go public, or improve investor sentiment toward their stock.

Independent Research and Consulting Firm

Equity Bottom-Up

<ul>
<li>A massive shortage of IT professionals combined with Shift's overwhelming dominance of the labor market should drive 20% annual revenue growth through 2030. </li>
<li>But Shift missed consensus profitability estimates 3 consecutive quarters, and the share price is down 67% in 12 months, compared to an 18% rise in the median peer. </li>
<li>In our view, a recovery in profitability is already underway, and shares are at least 45% undervalued</li>
</ul>


A massive shortage of IT professionals combined with Shift's overwhelming dominance of the labor market should drive 20% annual revenue growth through 2030. 
But Shift missed consensus profitability estimates 3 consecutive quarters, and the share price is down 67% in 12 months, compared to an 18% rise in the median peer. 
In our view, a recovery in profitability is already underway, and shares are at least 45% undervalued


Shift (3697): Profitability Rebound Underway

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>The Sep 2024 Nikkei 225 Review data set is mostly done, and one can interpolate results relatively accurately. It still leaves us with one ADD, one DELETE, and capping fun.</li>
<li>Recently, Yanai-san sold more <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>. There is more Real World Float- more active holders own more stock (which may mean less interest to buy later).</li>
<li>There is a dark horse candidate which is on investor radar for other reasons. It would not be out of the question, but the precedent is old, and different.</li>
</ul>


The Sep 2024 Nikkei 225 Review data set is mostly done, and one can interpolate results relatively accurately. It still leaves us with one ADD, one DELETE, and capping fun.
Recently, Yanai-san sold more Fast Retailing (9983 JP). There is more Real World Float- more active holders own more stock (which may mean less interest to buy later).
There is a dark horse candidate which is on investor radar for other reasons. It would not be out of the question, but the precedent is old, and different.


Sep24 Nikkei 225 Rebal - Still 1 ADD (Ryohin Keikaku), 1 DELETE, and 1 Very Large Very Dark Horse

Japan Specialist

Mark Chadwick

Thematic (Sector/Industry)

<ul>
<li>The recent market tremors sparked by DeepSeek, a Chinese AI firm, have rattled investors, prompting a wave of selling in AI stocks</li>
<li>The long-term AI narrative remains compelling and the current dip could offer compelling opportunities - we highlight the sell-off in Japanese names</li>
<li>The Bank of Japan’s long-standing commitment to ultra-loose monetary policy is looking increasingly untenable</li>
</ul>


The recent market tremors sparked by DeepSeek, a Chinese AI firm, have rattled investors, prompting a wave of selling in AI stocks
The long-term AI narrative remains compelling and the current dip could offer compelling opportunities - we highlight the sell-off in Japanese names
The Bank of Japan’s long-standing commitment to ultra-loose monetary policy is looking increasingly untenable


Japan Strategy Weekly | A Buying Opportunity in the AI Rubble?

<ul>
<li>The review period for the <a href="https://www.smartkarma.com/entities/nikkei-225" target="_blank" data-smartkarma-citation="entities:22909:1" rel="noopener">Nikkei 225 Index</a> March rebalance ends in 3 weeks. There could be one outright change and one or two others driven by sector balance.</li>
<li>
<a href="https://www.smartkarma.com/entities/shift-inc" target="_blank" data-smartkarma-citation="entities:7266:1" rel="noopener">Shift Inc (3697 JP)</a> will have a 15:1 stock split next week and that puts the stock in the list of potential inclusions over the next couple of rebalances.</li>
<li>The recent drop in <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>'s stock price will lead to a single step drop in the PAF. That means less passive selling and a smaller funding buy.</li>
</ul>


The review period for the Nikkei 225 Index March rebalance ends in 3 weeks. There could be one outright change and one or two others driven by sector balance.

Shift Inc (3697 JP) will have a 15:1 stock split next week and that puts the stock in the list of potential inclusions over the next couple of rebalances.
The recent drop in Fast Retailing (9983 JP)'s stock price will lead to a single step drop in the PAF. That means less passive selling and a smaller funding buy.


Nikkei 225 Index Rebalance Preview (Mar 2025): SHIFT Splits; Updated Ranking, Capping & Funding

Japan

Nomura Research Institute, Ltd. provides information technology, research, consulting, and analyzing for business strategy decision-making.  The Company also provides application software for system operation services.

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Nomura Research Institute (4307 JP)

Nikkei 225 Index Rebalance: NRI, Ryohin Keikaku IN; Nippon Paper, DIC OUT; Fast Retailing Capped

Nomura Research Institute and Ryohin Keikaku replace Nippon Paper and DIC in the Nikkei 225. Fast Retailing will be capped (and probably again in...

Brian Freitas

Shift (3697): Profitability Rebound Underway

Japan's massive shortage of IT professionals and Shift's dominance of the IT labor market should sustain 20% annual sales growth. Profit could grow...

Michael Allen

Sep24 Nikkei 225 Rebal - Still 1 ADD (Ryohin Keikaku), 1 DELETE, and 1 Very Large Very Dark Horse

The Nikkei 225 Rebal for Sep24 has 3mos before the data cutoff. I still see one ADD and one DELETE. There is a possible dark horse ADD, and Fast...

Travis Lundy

Japan Strategy Weekly | A Buying Opportunity in the AI Rubble?

Market tremors caused by DeepSeek have led to a sell-off in AI stocks, but long-term opportunities may arise, especially in Japanese names; Bank...

Mark Chadwick

Nikkei 225 Index Rebalance Preview (Mar 2025): SHIFT Splits; Updated Ranking, Capping & Funding

With 4 days left in the review period, Fast Retailing is now in double capping zone which would require passives to sell 13.3m shares in March. If...

Brian Freitas

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Nikkei 225 Index Rebalance: NRI, Ryohin Keikaku IN; Nippon Paper, DIC OUT; Fast Retailing Capped

Nomura Research Institute and Ryohin Keikaku replace Nippon Paper and DIC in the Nikkei 225. Fast Retailing will be capped (and probably again in...

Brian Freitas

Shift (3697): Profitability Rebound Underway

Japan's massive shortage of IT professionals and Shift's dominance of the IT labor market should sustain 20% annual sales growth. Profit could grow...

Michael Allen

Sep24 Nikkei 225 Rebal - Still 1 ADD (Ryohin Keikaku), 1 DELETE, and 1 Very Large Very Dark Horse

The Nikkei 225 Rebal for Sep24 has 3mos before the data cutoff. I still see one ADD and one DELETE. There is a possible dark horse ADD, and Fast...

Travis Lundy

Japan Strategy Weekly | A Buying Opportunity in the AI Rubble?

​Market tremors caused by DeepSeek have led to a sell-off in AI stocks, but long-term opportunities may arise, especially in Japanese names; Bank...

Mark Chadwick

Nikkei 225 Index Rebalance Preview (Mar 2025): SHIFT Splits; Updated Ranking, Capping & Funding

With 4 days left in the review period, Fast Retailing is now in double capping zone which would require passives to sell 13.3m shares in March. If...

Brian Freitas

Market tremors caused by DeepSeek have led to a sell-off in AI stocks, but long-term opportunities may arise, especially in Japanese names; Bank...