'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

ja research

ja research is an independent research platform focused exclusively on Japanese equities. Leveraging data and graphic analysis provided by Japan Analytics, we provide insights on small and medium-sized companies that have been ignored by the sell-side as well as challenging conventional wisdom on larger companies. We also offer analyst and corporate access, the latter with translation if required. 

Thematic (Sector/Industry)

IN ONE SENTENCE - If you wish to read no further, this insight can be summarised as - 1st Half &gt; 2nd Half + 1st Quarter &gt; 2nd Quarter &gt; 4th Quarter &gt;&gt; 3rd Quarter and so perhaps the old adage should be modified for Japan to read 'Sell in July and Say Goodbye...Please Come Back on Culture Day (November 3rd)'
SEASONALITY SCORE - We have also calculated a Seasonality Score for each stock, sector, cap range and the market as a measure of the seasonality of returns. The highest current score is 22.0 for the aptly-named <a href="https://www.smartkarma.com/entities/5311" target="_blank" data-smartkarma-citation="entities:5311:1">Extreme (6033 JP)</a>, with the Kyushu regional bank <a href="https://www.smartkarma.com/entities/6035" target="_blank" data-smartkarma-citation="entities:6035:1">Miyazaki Taiyo Bank (8560 JP)</a> (traded 'appointment-only' on the Fukuoka Stock Exchange) having the lowest score of 0.33. Miyazaki Taiyo is also one of the three stocks which have positive returns on average for only two months of the year - the others being fellow Fukuoka-listed Kyushu bank <a href="https://www.smartkarma.com/entities/5367" target="_blank" data-smartkarma-citation="entities:5367:1">Minami Nippon (8554 JP)</a> and biotechnology pioneer <a href="https://www.smartkarma.com/entities/3429" target="_blank" data-smartkarma-citation="entities:3429:1">Reprocell (4978 JP)</a>. 
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/062/938/original/2018-09-05_19-59-32.png?1536145211" class="editor-image img-responsive" data-smartkarma-image-id="62938"></figure>
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<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/062/939/original/2018-09-05_20-00-36.png?1536145254" class="editor-image img-responsive" data-smartkarma-image-id="62939"></figure>
Source: Japan Analytics
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A JAPANESE SEASONALITY THEORY - In addition to weakness the August, there is a tendency for the 'middle' month in each quarter to be weaker than the first and last, with the only exception being November. These middle months coincide with the peak in quarterly earnings announcements for companies with year-ends in March, June, October and December which account for 63% by number but 92% by market capitalisation of currently listed companies.  With significant and increasing volatility around such periods, there are greater opportunities for trend reversals and, as a result, performance in these months tends to be more muted. As to why August and February are the worst-performing of these middle-months, we would turn the question around. May's results include the, normally upbeat, new forecasts for the current year, while November is the second most frequent month for revision announcements for the March-June-October-December cohort. August and February are the months that this group of companies have to 'face' reality without the ability to temper things with hope.
DIVIDEND TIMING - The timing of dividend payments is also a factor in seasonality. With the substantial majority of ex-dividend dates and subsequent receipt of the dividend payments being in May/June and November/December each year, this factor acts as an additional depressant and then booster (to the extent that dividends are re-invested) in each of these month pairs.
SECTORS AND COMPANIES - The insight also provides a detailed analysis of seasonality by sector and company, as well as providing a 'portfolio' of long and short sectors recommendations for the month and lists of stocks ranked by Seasonality Score and the best and worst performing 'September Stocks'.

IN ONE SENTENCE - If you wish to read no further, this insight can be summarised as - 1st Half &gt; 2nd Half + 1st Quarter &gt; 2nd Quarter &gt; 4th Quarter &gt;&gt; 3rd Quarter and so perhaps the old adage should be modified for Japan to read 'Sell in July and Say Goodbye...Please Come Back on Culture Day (November 3rd)'
SEASONALITY SCORE - We have also calculated a Seasonality Score for each stock, sector, cap range and the market as a measure of the seasonality of returns. The highest current score is 22.0 for the aptly-named Extreme (6033 JP), with the Kyushu regional bank Miyazaki Taiyo Bank (8560 JP) (traded 'appointment-only' on the Fukuoka Stock Exchange) having the lowest score of 0.33. Miyazaki Taiyo is also one of the three stocks which have positive returns on average for only two months of the year - the others being fellow Fukuoka-listed Kyushu bank Minami Nippon (8554 JP) and biotechnology pioneer Reprocell (4978 JP). 



Source: Japan Analytics

A JAPANESE SEASONALITY THEORY - In addition to weakness the August, there is a tendency for the 'middle' month in each quarter to be weaker than the first and last, with the only exception being November. These middle months coincide with the peak in quarterly earnings announcements for companies with year-ends in March, June, October and December which account for 63% by number but 92% by market capitalisation of currently listed companies.  With significant and increasing volatility around such periods, there are greater opportunities for trend reversals and, as a result, performance in these months tends to be more muted. As to why August and February are the worst-performing of these middle-months, we would turn the question around. May's results include the, normally upbeat, new forecasts for the current year, while November is the second most frequent month for revision announcements for the March-June-October-December cohort. August and February are the months that this group of companies have to 'face' reality without the ability to temper things with hope.
DIVIDEND TIMING - The timing of dividend payments is also a factor in seasonality. With the substantial majority of ex-dividend dates and subsequent receipt of the dividend payments being in May/June and November/December each year, this factor acts as an additional depressant and then booster (to the extent that dividends are re-invested) in each of these month pairs.
SECTORS AND COMPANIES - The insight also provides a detailed analysis of seasonality by sector and company, as well as providing a 'portfolio' of long and short sectors recommendations for the month and lists of stocks ranked by Seasonality Score and the best and worst performing 'September Stocks'.  

Japan: Seasonality - "Sell in July and Say Goodbye...Please Come Back on Culture Day"

Japan TMT Analyst

Pelham Smithers

Market Intel on Asian Tech with a Japan focus

Pelham Smithers Associates

Founded in 2009, Pelham Smithers Associates (PSA) provides market intelligence on Asian technology, focusing in particular on Japan. The industries covered by our team of specialists are: consumer electronics, telecomms, pharmaceuticals, internet, electronic parts and materials, automotive technology, retail and capital goods. 

Research is provided by the following:
Pelham Smithers: Macro, consumer electronics, telecoms & pharma
Joel Scheiman: Electronics materials / components
Julie Boote: Autos
Will Nestuk: Capital goods, machinery & transportation equipment parts
Thao Nguyen: eCommerce, internet content, marketing & advertising

The suggestion of government orchestration against <a href="https://www.smartkarma.com/entities/8979" target="_blank" data-smartkarma-citation="entities:8979:1">Ono</a>’s immunotherapy treatment Opdivo (nivolumab) has moved a stage further with a report in the Nikkei that the Japanese Health Ministry is considering setting rules on new drug usage during this fiscal year, starting with <a href="https://www.smartkarma.com/entities/8979" target="_blank" data-smartkarma-citation="entities:8979:1">Ono</a>’s Opdivo and <a href="https://www.smartkarma.com/entities/6091" target="_blank" data-smartkarma-citation="entities:6091">Astellas</a>’s Repatha. Patients may be limited to those who can see certain impact from the treatment, which in turn would mean the drug could only be prescribed at those institutions with the facilities to check…

The suggestion of government orchestration against Ono’s immunotherapy treatment Opdivo (nivolumab) has moved a stage further with a report in the Nikkei that the Japanese Health Ministry is considering setting rules on new drug usage during this fiscal year, starting with Ono’s Opdivo and Astellas’s Repatha. Patients may be limited to those who can see certain impact from the treatment, which in turn would mean the drug could only be prescribed at those institutions with the facilities to check…

Opdivo Singled Out in Government Rule Change

Japan

ReproCell Incorporated develops iPS (Induced Pluripotent Stem Cell) business and clinical examination for organ transplantation based on human iPS and ES (Embryonic Stem Cell) technology.

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Reprocell Inc (4978 JP)

Japan: Seasonality - "Sell in July and Say Goodbye...Please Come Back on Culture Day"

IN ONE SENTENCE - If you wish to read no further, this insight can be summarised as - 1st Half > 2nd Half + 1st Quarter > 2nd Quarter >...

Campbell Gunn

Opdivo Singled Out in Government Rule Change

The suggestion of government orchestration against Ono’s immunotherapy treatment Opdivo (nivolumab) has moved a stage further with a report in the...

Pelham Smithers Associates

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