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>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> September rebalance ends in three weeks. There could be three changes at the rebalance with sector balance used for the additions.</li>
<li>Depending on the changes, passive trackers will need to buy between 3-57x ADV (2.4%-24% of real float) on the inclusions and sell between 3.7-8.4x ADV on the deletions.</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 index weight is currently higher than 10% and that will result in capping in September. Passives will need to sell 6x ADV in the stock.</li>
</ul>


The review period for the Nikkei 225 Index September rebalance ends in three weeks. There could be three changes at the rebalance with sector balance used for the additions.
Depending on the changes, passive trackers will need to buy between 3-57x ADV (2.4%-24% of real float) on the inclusions and sell between 3.7-8.4x ADV on the deletions.

Fast Retailing (9983 JP)'s index weight is currently higher than 10% and that will result in capping in September. Passives will need to sell 6x ADV in the stock.


Nikkei 225 Index Rebalance Preview (Sep 2024): Potential Adds/Deletes, Capping & Funding Changes

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>The Sep 2024 Nikkei 225 Review base date is six weeks away. One can no extrapolate results quite accurately. It still gives us one ADD, one DELETE, and capping fun.</li>
<li>Recently, Yanai-san sold more Fast Retailing (9983 JP). More active holders own more stock (which may mean less interest to buy later), and only 1% to go to avoid capping.</li>
<li>There should be one DELETE, one ADD. There is a low-probability Dark Horse ADD but I expect Kokusai Electric (6525) to be added in March 2025. </li>
</ul>


The Sep 2024 Nikkei 225 Review base date is six weeks away. One can no extrapolate results quite accurately. It still gives us one ADD, one DELETE, and capping fun.
Recently, Yanai-san sold more Fast Retailing (9983 JP). More active holders own more stock (which may mean less interest to buy later), and only 1% to go to avoid capping.
There should be one DELETE, one ADD. There is a low-probability Dark Horse ADD but I expect Kokusai Electric (6525) to be added in March 2025. 


Sep24 Nikkei 225 Rebal - Still 1 ADD, 1 DELETE, 1 Dark Horse, But #2-Ranked ADD Is Close

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. 

Thematic (Sector/Industry)

<ul>
<li>The three big convenience store chains all posted record financial results for FY2023. </li>
<li>The format’s limitations were exposed by the pandemic, providing a catalyst for some major changes and prompting new and innovative marketing and support services.</li>
<li>These have made the sector more robust, but whether this new surge of growth will continue in 2024 will depend on how concerned customers are with higher prices.</li>
</ul>


The three big convenience store chains all posted record financial results for FY2023. 
The format’s limitations were exposed by the pandemic, providing a catalyst for some major changes and prompting new and innovative marketing and support services.
These have made the sector more robust, but whether this new surge of growth will continue in 2024 will depend on how concerned customers are with higher prices.


<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 (NKY INDEX)</a> September rebalance ends in July. There could be three changes at the rebalance with sector balance in focus for the additions.</li>
<li>Depending on the changes, passive trackers will need to buy between 5-16x ADV (10.1%-24% of real float) on the inclusions and sell between 4-42x ADV on the deletions.</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> will be capped to 10% of the index weight while <a href="https://www.smartkarma.com/entities/tokyo-electron-ltd" target="_blank" data-smartkarma-citation="entities:280:1" rel="noopener">Tokyo Electron (8035 JP)</a> is also close to the 10% cap.</li>
</ul>


The review period for the Nikkei 225 (NKY INDEX) September rebalance ends in July. There could be three changes at the rebalance with sector balance in focus for the additions.
Depending on the changes, passive trackers will need to buy between 5-16x ADV (10.1%-24% of real float) on the inclusions and sell between 4-42x ADV on the deletions.

Fast Retailing (9983 JP) will be capped to 10% of the index weight while Tokyo Electron (8035 JP) is also close to the 10% cap.


Nikkei 225 Index Rebalance Preview (Sep 2024): Ranking, Capping, Funding & Other Changes

David Blennerhassett

<ul>
<li>9 weeks ago, the FT reported Elliott Management had a stake in <a href="https://www.smartkarma.com/entities/mitsui-fudosan-co-ltd" target="_blank" data-smartkarma-citation="entities:565:1" rel="noopener">Mitsui Fudosan (8801 JP)</a> and had asked them to sell cross-holdings and do a ¥1trln buyback. Mitsui responds.</li>
<li>Lawrence Ho is buying <a href="https://www.smartkarma.com/entities/melco-international-development-ltd" target="_blank" data-smartkarma-citation="entities:809:1" rel="noopener">Melco(200 HK)</a>. While it often pays to follows where the family invests, Melco is trading too tight for what is a simple holding company structure.</li>
<li>Avoid being long <a href="https://www.smartkarma.com/entities/aozora-bank-ltd" target="_blank" data-smartkarma-citation="entities:6483:1" rel="noopener">Aozora Bank Ltd (8304 JP)</a> vs the Banks Index, a portfolio of other cheaper banks, etc. Minimal/negligible upside in following Murakami-san here. And Activism on Banks is difficult.</li>
</ul>


9 weeks ago, the FT reported Elliott Management had a stake in Mitsui Fudosan (8801 JP) and had asked them to sell cross-holdings and do a ¥1trln buyback. Mitsui responds.
Lawrence Ho is buying Melco(200 HK). While it often pays to follows where the family invests, Melco is trading too tight for what is a simple holding company structure.
Avoid being long Aozora Bank Ltd (8304 JP) vs the Banks Index, a portfolio of other cheaper banks, etc. Minimal/negligible upside in following Murakami-san here. And Activism on Banks is difficult.


Last Week in Event SPACE: Mitsui Fudosan, Melco, Aozora Bank, CGN New Energy

Japan

RYOHIN KEIKAKU CO., LTD. is a retailer and wholesaler of Mujirushi Ryohin brand products, which were originally a generic private-brand product.  The Company's product line includes knitwear, food, and household items

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Ryohin Keikaku (7453 JP)

Nikkei 225 Index Rebalance Preview (Sep 2024): Potential Adds/Deletes, Capping & Funding Changes

We forecast 3 changes for the NKY in September with sector balance determining the inclusions. Fast Retailing will be capped at 10%. Passives need...

Brian Freitas

Sep24 Nikkei 225 Rebal - Still 1 ADD, 1 DELETE, 1 Dark Horse, But #2-Ranked ADD Is Close

The Nikkei 225 rebal for September is still likely to be a small affair. One ADD. One DELETE. The big capping trade for Fast Retailing is 1% away...

Travis Lundy

Stellar Year for Conbini Chains

Convenience store chains saw record results in FY2023, with pandemic-driven changes prompting innovation and growth, but future success may hinge...

Michael Causton

Nikkei 225 Index Rebalance Preview (Sep 2024): Ranking, Capping, Funding & Other Changes

There could be 3 changes for the NKY in September with sector balance determining the inclusions. Fast Retailing will be capped while Tokyo...

Brian Freitas

Last Week in Event SPACE: Mitsui Fudosan, Melco, Aozora Bank, CGN New Energy

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Nikkei 225 Index Rebalance Preview (Sep 2024): Potential Adds/Deletes, Capping & Funding Changes

We forecast 3 changes for the NKY in September with sector balance determining the inclusions. Fast Retailing will be capped at 10%. Passives need...

Brian Freitas

Sep24 Nikkei 225 Rebal - Still 1 ADD, 1 DELETE, 1 Dark Horse, But #2-Ranked ADD Is Close

The Nikkei 225 rebal for September is still likely to be a small affair. One ADD. One DELETE. The big capping trade for Fast Retailing is 1% away...

Travis Lundy

Stellar Year for Conbini Chains

​Convenience store chains saw record results in FY2023, with pandemic-driven changes prompting innovation and growth, but future success may hinge...

Michael Causton

Nikkei 225 Index Rebalance Preview (Sep 2024): Ranking, Capping, Funding & Other Changes

There could be 3 changes for the NKY in September with sector balance determining the inclusions. Fast Retailing will be capped while Tokyo...

Brian Freitas

Last Week in Event SPACE: Mitsui Fudosan, Melco, Aozora Bank, CGN New Energy

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

Convenience store chains saw record results in FY2023, with pandemic-driven changes prompting innovation and growth, but future success may hinge...