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.

Quantitative Analysis

<ul>
<li>We analyzed the changes in margin trading positions of JPX stocks as of Aug 8th. The aggregated net margin trading position is USD15,664m.</li>
<li>We tabulate league tables for top/bottom net long/short of margin trading by value, net margin buy as multiple of ADT.</li>
<li>We highlight net margin buy/sell changes in Furukawa Electric, Disco, Mitsubishi Heavy Industries, SoftBank, Advantest, Tokyo Electron, Nintendo, IHI, Chugai Pharmaceutical, Toyota Motor, Furukawa Electric, Disco, Mitsubishi Heavy Industries.</li>
</ul>


We analyzed the changes in margin trading positions of JPX stocks as of Aug 8th. The aggregated net margin trading position is USD15,664m.
We tabulate league tables for top/bottom net long/short of margin trading by value, net margin buy as multiple of ADT.
We highlight net margin buy/sell changes in Furukawa Electric, Disco, Mitsubishi Heavy Industries, SoftBank, Advantest, Tokyo Electron, Nintendo, IHI, Chugai Pharmaceutical, Toyota Motor, Furukawa Electric, Disco, Mitsubishi Heavy Industries.


JPX Margin Trading Weekly (Aug 8th): Furukawa Electric, Disco, Mitsubishi Heavy Industries, SoftBank

Expert on Japan Retail and Consumer Markets, JapanConsuming

Michael Causton

Expert on Japan Retail and Consumer Markets

Real Insight on Japanese Consumer Markets

JapanConsuming

JapanConsuming is a specialist research firm producing intelligence on Japanese retail and consumer markets. Founded in 2000, JapanConsuming has become the leading provider of insights on Japanese retailers and consumer trends to retailers, brands, government agencies and investors. As well as a highly regarded monthly report on the market, JapanConsuming produces in-depth reports on retail sectors, seminars on key trends and telephone consulting to investors on trends and retailers.

JapanConsuming was founded by Michael Causton and Roy Larke. 

Event-Driven

<ul>
<li>Aeon will almost definitely increase its stake in Tsuruha Holdings, which on its own will catalyse drugstore competitors to consider their mergeable options.</li>
<li>Tsuruha MAY merge with Welcia under Aeon and just talk of this will catalyse drugstore competitors even more.</li>
<li>But the ongoing fusion of drugstore retailing and FMCG formats like supermarkets and convenience stores, will also spur the entire FMCG sector to respond to Aeon's massive potential dominance.</li>
</ul>


Aeon will almost definitely increase its stake in Tsuruha Holdings, which on its own will catalyse drugstore competitors to consider their mergeable options.
Tsuruha MAY merge with Welcia under Aeon and just talk of this will catalyse drugstore competitors even more.
But the ongoing fusion of drugstore retailing and FMCG formats like supermarkets and convenience stores, will also spur the entire FMCG sector to respond to Aeon's massive potential dominance.


Aeon (Maybe) Gets Tsuruha, Could Trigger Wave of Mergers in the Sector (And Beyond)

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

NTT (Nippon Telegraph & Telephone) / Event-Driven

NTT (Nippon Telegraph & Telephone) (9432 JP)

<ul>
<li>On 7 April, the JPX announced the changes to the Free Float Weights (FFW) for the TOPIX Index. There are some big changes due to the updated FFW methodology.</li>
<li>From April to June, we see a one-way turnover of 2.87% and a one-way trade of ¥2,285bn. Some stocks have opposite way flows in different months.</li>
<li>Stocks with inflows outperformed stocks with outflows from Oct-Dec 2021 before giving up all the gains. These stocks have started to outperform and could continue outperforming over the next quarter.</li>
</ul>


On 7 April, the JPX announced the changes to the Free Float Weights (FFW) for the TOPIX Index. There are some big changes due to the updated FFW methodology.
From April to June, we see a one-way turnover of 2.87% and a one-way trade of ¥2,285bn. Some stocks have opposite way flows in different months.
Stocks with inflows outperformed stocks with outflows from Oct-Dec 2021 before giving up all the gains. These stocks have started to outperform and could continue outperforming over the next quarter.


TOPIX FFW Transition - Big Flows from April to June

Index Rebal/Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Index Rebal/Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

<ul>
<li>The Tokyo Stock Exchange (TSE) calculates Free-Float Weight (FFW) for each listed company and uses this value as a key component of TOPIX Index Calculation. </li>
<li>For companies with "low liquidity" the FFW will be multiplied by a fixed liquidity factor of 0.75 to derive the final FFW used for index calculation. </li>
<li>Every April, the application of this liquidity factor is reviewed by the TSE for all TSE1 constituents. This situation opens up interesting opportunities for a basket trade. </li>
</ul>


The Tokyo Stock Exchange (TSE) calculates Free-Float Weight (FFW) for each listed company and uses this value as a key component of TOPIX Index Calculation. 
For companies with "low liquidity" the FFW will be multiplied by a fixed liquidity factor of 0.75 to derive the final FFW used for index calculation. 
Every April, the application of this liquidity factor is reviewed by the TSE for all TSE1 constituents. This situation opens up interesting opportunities for a basket trade. 


TOPIX Index Upweights: The Big April Basket 2022 (Pre-Event)

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

On 31 August, <a href="https://www.smartkarma.com/entities/kansai-super-market-ltd" target="_blank" data-smartkarma-citation="entities:15519:1" rel="noopener">Kansai Super Market (9919 JP)</a> and its top shareholder (10.02% of shares out) <a href="https://www.smartkarma.com/entities/h2o-retailing-corp" target="_blank" data-smartkarma-citation="entities:17562:1" rel="noopener">H2 O Retailing (8242 JP)</a> (the parent of Hanshin Department Store and related companies) <a href="https://data.swcms.net/file/h2o-retailing/ja/news/auto_20210830491858/pdfFile.pdf" target="_blank" rel="noopener">announced</a> a business merger whereby the H₂O would inject two supermarket businesses it owns - Izumiya and Hankyu Oasis - into a holding company with Kansai Super, receiving shares in a newly enlarged Kansai Super in exchange. H₂O would go from owning 10.66% to owning 58% of Kansai Super, and the 89.34% would own 42% of NEWCO. The merger was short-dated/accelerated, with the EGM to vote on this deal set for a Record Date on 15 September, the EGMs of all the related companies where an EGM was necessary (Kansai Super, Hankyu Oasis, and Izumiya (the latter two foregone conclusions because they are 100%-owned by H₂O) on 29 October, and the merger effective December 1st.The shares popped a bit, then fell back. At first glance, this seemed somewhat opportunistic for H₂O, and it meant that the 89.34% "minority" in Kansai Super would become a real minority without getting paid a premium or provided a chance to exit. Based on the net assets of the companies, it seemed like H₂O was getting a good deal. Based on the OP levels in the past year, it did not seem like H₂O was getting special treatment. A couple of days later, on 3 September, privately-held discount ("every day low price") supermarket chain OK Corp (primarily based in the Kanto area, but which had been aimed at expanding into the Kansai area), which was the second-largest single shareholder of Kansai Super (based originally in Osaka/Kansai) at 7.23%, stepped up and offered a <a href="https://ok-corporation.jp/media/001/202109/20210903_%E3%83%97%E3%83%AC%E3%82%B9%E3%83%AA%E3%83%AA%E3%83%BC%E3%82%B9.pdf" target="_blank" rel="noopener">press release</a> which said that it would vote against the merger and if the merger were not approved, it would be willing to launch a Tender Offer to buy the shares of Kansai Super at ¥2,250/share (the highest price since listing and nearly vs ¥1,374/share the day before, and more than double the market price of Kansai Super in June when the proposal was made). On 3 Sep OK complained about their treatment, and noted that from the perspective of shareholder interest, their bid should be considered, but OK also had no intention of launching a hostile bid.The shares popped, moving limit up. Then limit up another day, and then the shares traded at JPY 2,200/share in considerable volume before drifting lower.<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/229/527/original/Screenshot+2021-09-13+at+8.10.54+PM.png?1631535065" class="editor-image img-responsive" data-smartkarma-image-id="229527"></figure></section>Today the shares fell back 7+% to just below JPY 2,000/share. There is some very long history between the founder of OK and Yuji Kitano the founder of Kansai Super, and they once worked together, with OK seconding employees to Kansai Super to learn the business of fresh grocery sales. Mr Kitano passed away in 2013, and OK Supermarket started buying shares in 2016, getting to just under 5%, then it peaked its head above and by the end of the fiscal year in February, owned 7.23%. Of course, that year in October (2016), Kansai Super entered into a business and capital alliance with H₂O Retailing, and H₂O bought about 10% of the shares out. Fast forward five years and it turns out that OK approached Kansai Super in April 2021, and proposed a capital and business alliance on 9 June, in writing. Kansai Super put this to an Independent Committee which then took its time, setting its first meeting with OK some 11 weeks later on 26 August. The Kansai Super <a href="http://www.kansaisuper.co.jp/upimages/irinfo/irnews_629.pdf" target="_blank" rel="noopener">release</a> (Japanese only) on 31 August suggests there was a "third party tender offer approach" but then doesn't discuss it much while saying that intense discussions and due diligence was afforded to H₂O Retailing in the same timeframe.Five days after the first interview with OK, Kansai Super and H₂O announced their deal. This is a complicated deal and it begs the question of whether shareholder interests matter and how shareholders decide. More discussion below.

On 31 August, Kansai Super Market (9919 JP) and its top shareholder (10.02% of shares out) H2 O Retailing (8242 JP) (the parent of Hanshin Department Store and related companies) announced a business merger whereby the H₂O would inject two supermarket businesses it owns - Izumiya and Hankyu Oasis - into a holding company with Kansai Super, receiving shares in a newly enlarged Kansai Super in exchange. H₂O would go from owning 10.66% to owning 58% of Kansai Super, and the 89.34% would own 42% of NEWCO. The merger was short-dated/accelerated, with the EGM to vote on this deal set for a Record Date on 15 September, the EGMs of all the related companies where an EGM was necessary (Kansai Super, Hankyu Oasis, and Izumiya (the latter two foregone conclusions because they are 100%-owned by H₂O) on 29 October, and the merger effective December 1st.The shares popped a bit, then fell back. At first glance, this seemed somewhat opportunistic for H₂O, and it meant that the 89.34% "minority" in Kansai Super would become a real minority without getting paid a premium or provided a chance to exit. Based on the net assets of the companies, it seemed like H₂O was getting a good deal. Based on the OP levels in the past year, it did not seem like H₂O was getting special treatment. A couple of days later, on 3 September, privately-held discount ("every day low price") supermarket chain OK Corp (primarily based in the Kanto area, but which had been aimed at expanding into the Kansai area), which was the second-largest single shareholder of Kansai Super (based originally in Osaka/Kansai) at 7.23%, stepped up and offered a press release which said that it would vote against the merger and if the merger were not approved, it would be willing to launch a Tender Offer to buy the shares of Kansai Super at ¥2,250/share (the highest price since listing and nearly vs ¥1,374/share the day before, and more than double the market price of Kansai Super in June when the proposal was made). On 3 Sep OK complained about their treatment, and noted that from the perspective of shareholder interest, their bid should be considered, but OK also had no intention of launching a hostile bid.The shares popped, moving limit up. Then limit up another day, and then the shares traded at JPY 2,200/share in considerable volume before drifting lower.Today the shares fell back 7+% to just below JPY 2,000/share. There is some very long history between the founder of OK and Yuji Kitano the founder of Kansai Super, and they once worked together, with OK seconding employees to Kansai Super to learn the business of fresh grocery sales. Mr Kitano passed away in 2013, and OK Supermarket started buying shares in 2016, getting to just under 5%, then it peaked its head above and by the end of the fiscal year in February, owned 7.23%. Of course, that year in October (2016), Kansai Super entered into a business and capital alliance with H₂O Retailing, and H₂O bought about 10% of the shares out. Fast forward five years and it turns out that OK approached Kansai Super in April 2021, and proposed a capital and business alliance on 9 June, in writing. Kansai Super put this to an Independent Committee which then took its time, setting its first meeting with OK some 11 weeks later on 26 August. The Kansai Super release (Japanese only) on 31 August suggests there was a "third party tender offer approach" but then doesn't discuss it much while saying that intense discussions and due diligence was afforded to H₂O Retailing in the same timeframe.Five days after the first interview with OK, Kansai Super and H₂O announced their deal. This is a complicated deal and it begs the question of whether shareholder interests matter and how shareholders decide. More discussion below. 

Japan

RETAIL PARTNERS CO., LTD. operates regional supermarket chain based in Yamaguchi Prefecture.  The Company also sells household utensils, appliances, and clothing.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Retail Partners (8167 JP)

JPX Margin Trading Weekly (Aug 8th): Furukawa Electric, Disco, Mitsubishi Heavy Industries, SoftBank

We analyzed JPX margin trading positions report for the past week and highlighted Furukawa Electric (5801 JP), Disco (6146 JP), Mitsubishi Heavy...

Ke Yan, CFA, FRM

Aeon (Maybe) Gets Tsuruha, Could Trigger Wave of Mergers in the Sector (And Beyond)

Aeon's potential increased stake in Tsuruha Holdings and possible merger with Welcia will likely prompt drugstore competitors to consider their...

Michael Causton

TOPIX FFW Transition - Big Flows from April to June

Changes to the Topix FFW methodology will result in a turnover of 2.87% & trade of ¥2,285bn from April to June. There is a lot to trade on some...

Brian Freitas

TOPIX Index Upweights: The Big April Basket 2022 (Pre-Event)

Every April, the application of this liquidity factor is reviewed by the TSE for all TSE1 constituents. This situation opens up interesting...

Janaghan Jeyakumar, CFA

The Kansai Super (9919) Conundrum

Kansai Super has Two Suitors - H2O Retailing and Kansai Super have ironed out a deal, and OK Corp objects. This creates a conundrum. But solving it...

Travis Lundy

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

JPX Margin Trading Weekly (Aug 8th): Furukawa Electric, Disco, Mitsubishi Heavy Industries, SoftBank

We analyzed JPX margin trading positions report for the past week and highlighted Furukawa Electric (5801 JP), Disco (6146 JP), Mitsubishi Heavy...

Ke Yan, CFA, FRM

Aeon (Maybe) Gets Tsuruha, Could Trigger Wave of Mergers in the Sector (And Beyond)

​Aeon's potential increased stake in Tsuruha Holdings and possible merger with Welcia will likely prompt drugstore competitors to consider their...

Michael Causton

TOPIX FFW Transition - Big Flows from April to June

Changes to the Topix FFW methodology will result in a turnover of 2.87% & trade of ¥2,285bn from April to June. There is a lot to trade on some...

Brian Freitas

TOPIX Index Upweights: The Big April Basket 2022 (Pre-Event)

Every April, the application of this liquidity factor is reviewed by the TSE for all TSE1 constituents. This situation opens up interesting...

Janaghan Jeyakumar, CFA

The Kansai Super (9919) Conundrum

Kansai Super has Two Suitors - H2O Retailing and Kansai Super have ironed out a deal, and OK Corp objects. This creates a conundrum. But solving it...

Travis Lundy

Aeon's potential increased stake in Tsuruha Holdings and possible merger with Welcia will likely prompt drugstore competitors to consider their...