Chart based progressive global trading strategies, Chart Partners

Thomas Schroeder

Chart based progressive global trading strategies

Chart Partners

Chart Partners objective is to discover medium-term cycle turns and profit opportunities before they unfold, within structural trends while preserving capital with clear degrees of risk. We have real return ideas. 

Markets are dynamic and trading systems must reflect this. It is crucial to determine underlying correlations and lead-lag relationships within global markets and the impact on linked instruments. Our weekly Chartonics product gives you short-term trading strategies that can be applied within the medium and longer term macro trends that are mapped out in our strategy updates. 

Our methodology fuses global market variables and isolates drivers in trends. We specialize in FX, index trade in NY and Asia with a focus on Asian stocks. 

Technical Analysis

<a href="https://www.smartkarma.com/entities/sugi-holdings-co-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:9255:1">Sugi Holdings (7649 JP)</a> exhibits an increasing bias to press on and break 5,000-100 support that will act as the bull/bear line in the sand for the intermediate cycle. Holding this support will allow for a tactical bounce attempt that would simply buy time barring a bull event.Trendline and price support coincide at 5,000-100 and once broken would induce a test on 4,700 price and 61.8% retracement support. Below 4,700 would reach for a new chart low. Macro cycle needs some basing confirmation near the recent low or a minor new low as the weekly MACD turns down from outlined resistance. It is this basing cycle that we see a macro opportunity with a longer term bull projection above the 6,800 dual highs with well defined hurdles on the way upward that will help identify breakouts and momentum points.

Sugi Holdings (7649 JP) exhibits an increasing bias to press on and break 5,000-100 support that will act as the bull/bear line in the sand for the intermediate cycle. Holding this support will allow for a tactical bounce attempt that would simply buy time barring a bull event.Trendline and price support coincide at 5,000-100 and once broken would induce a test on 4,700 price and 61.8% retracement support. Below 4,700 would reach for a new chart low. Macro cycle needs some basing confirmation near the recent low or a minor new low as the weekly MACD turns down from outlined resistance. It is this basing cycle that we see a macro opportunity with a longer term bull projection above the 6,800 dual highs with well defined hurdles on the way upward that will help identify breakouts and momentum points.

Sugi Holding Bull/Bear Pivot, Macro Buy Zone and Rally Projections

'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. 

Quantitative Analysis

<div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/093/001/original/2019-07-13_16-16-31.png?1563002212" class="editor-image img-responsive" data-smartkarma-image-id="93001"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/093/005/original/2019-07-13_16-25-24.png?1563002742" class="editor-image img-responsive" data-smartkarma-image-id="93005"></figure>Source: Japan Analytics
</div>MOVING AVERAGE BREAKOUT - Japanese equities have now risen by 5.1% since the low of 4th June and, since July 1st, the Total Market Value has exceeded the 50-Day Moving Average for the first time since 26th April. Over the last two weeks, the Total Market Value has gained 1.7% in both Yen and US dollar times. For the previous twelve months, the equity market has moved in line with the US dollar/Japanese Yen exchange rate. It remains to be seen how the 'gap' that has opened up in the last month will be closed. Any further strength in the Yen from current levels will likely see the market slip below the 50-Day Moving Average again.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/093/020/original/2019-07-14_06-28-16.png?1563053334" class="editor-image img-responsive" data-smartkarma-image-id="93020"></figure><div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/093/024/original/2019-07-14_06-45-29.png?1563054338" class="editor-image img-responsive" data-smartkarma-image-id="93024"></figure> Source: Japan Analytics</div>VALUE TRADED RATIO - The Value Traded Ratio (Value Traded/Total Market Value) has seen two new eighteen-month lows. If the three days around Christmas are excluded, the current apathy towards Japanese equities is the most extreme since 2012 and is confirmed by recent BAML investor surveys. In the past, such periods of inactivity (marked"▲"above)  have preceded changes in market direction, more often upwards rather than downwards and suggest the current rally has more 'legs'. <div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/093/025/original/2019-07-14_06-47-40.png?1563054585" class="editor-image img-responsive" data-smartkarma-image-id="93025"></figure> Source: Japan Analytics</div>TORAKU INDEX - Conversely, the Toraku advance/decline index is suggesting a degree of caution having breached the 120 'overbought' line for only the third time in eighteen months. Combining this analysis with the Value Traded Ratio, there is scope for a short-term upward move akin to that of October 2018 to be followed by a sharper downward trend into the autumn.  <div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/093/026/original/2019-07-14_06-54-51.png?1563054906" class="editor-image img-responsive" data-smartkarma-image-id="93026"></figure> Source: Japan Analytics</div>VOLUME SCORE TIMELINE - The lull in market turnover is confirmed in the greener 'bias' in our Sector volume timeline. The Retail and Restaurant Sectors are hot as we are in the middle of the quarterly results announcements for February/May/August/November year-end companies. REITs remain the 'go-to' defensive Sector while the Information Technology and Internet Sectors are the 'tema-du-jour' - to mix language metaphors. The 'untouchables' are Metals, Banks, UtilitiesTransportation,  and Multi-Industry.<div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/093/028/original/2019-07-14_07-31-40.png?1563057109" class="editor-image img-responsive" data-smartkarma-image-id="93028"></figure> Source: Japan Analytics</div>3-MONTH SECTOR CONTRIBUTION - Over the last three months, a long Telcos/short Autos strategy would have yielded 82 basis points of performance. The Retail Sector has responded well to the results released so far led by drugstores <a href="https://www.smartkarma.com/entities/welcia-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:20895:1" rel="noopener">Welcia (3141 JP)</a> and <a href="https://www.smartkarma.com/entities/tsuruha-holdings-inc" target="_blank" data-smartkarma-citation="entities:9536:1" rel="noopener">Tsuruha (3391 JP), </a><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><a href="https://www.smartkarma.com/entities/tsuruha-holdings-inc" target="_blank" data-smartkarma-citation="entities:9536:1" rel="noopener">, and </a><a href="https://www.smartkarma.com/entities/lawson-inc" target="_blank" data-smartkarma-citation="entities:1040:1" rel="noopener">Lawson (2651 JP)</a>. Electrical Equipment has suffered from weakness in component stocks <a href="https://www.smartkarma.com/entities/alps-alpine-co-ltd" target="_blank" data-smartkarma-citation="entities:12001:1" rel="noopener">Alps Alpine (6770 JP)</a> (-38% over one year), <a href="https://www.smartkarma.com/entities/murata-manufacturing-co-ltd" target="_blank" data-smartkarma-citation="entities:11649:1" rel="noopener">Murata (6981 JP)</a> (see <a href="https://www.smartkarma.com/profiles/scott-foster" target="_blank" data-smartkarma-citation="accounts:1134" rel="noopener">Scott Foster</a>'s <a href="https://www.smartkarma.com/insights/murata-mfg-6981-jp-buy-on-decline-for-the-long-term" target="_blank" data-smartkarma-citation="insights:30919" rel="noopener">(Buy on Decline for the Long Term</a>), and <a href="https://www.smartkarma.com/entities/taiyo-yuden-co-ltd" target="_blank" data-smartkarma-citation="entities:9924:1" rel="noopener">Taiyo Yuden (6976 JP)</a>, while <a href="https://www.smartkarma.com/entities/smc-corp" target="_blank" data-smartkarma-citation="entities:20866:1" rel="noopener">SMC (6273 JP)</a>, <a href="https://www.smartkarma.com/entities/fanuc-corp" target="_blank" data-smartkarma-citation="entities:752:1" rel="noopener">Fanuc (6954 JP)</a>, and <a href="https://www.smartkarma.com/entities/komatsu-ltd" target="_blank" data-smartkarma-citation="entities:8416:1" rel="noopener">Komatsu (6301 JP)</a> have weighed on the Machinery Sector.<div class="content-caption">
<figure class="editor-figure mceNonEditable"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/093/031/original/2019-07-14_07-44-47.png?1563057897" class="editor-image img-responsive" data-smartkarma-image-id="93031"></figure></figure> Source: Japan Analytics</div>SECTOR SCORE MATRIX - Arranging our cap-weighted Sector Relative Price Scores and Results &amp; Revisions Scores in a four-quadrant matrix whose extremes are Contrarian Sell, Contrarian Buy, Unrequited Growth, and Ex-Growth suggest profit-taking in Information Technology (<a href="https://www.smartkarma.com/entities/obic-co-ltd" target="_blank" data-smartkarma-citation="entities:1273:1" rel="noopener">OBIC (4684 JP)</a>, Other Commerical Products (<a href="https://www.smartkarma.com/entities/hoya-corp" target="_blank" data-smartkarma-citation="entities:8990:1" rel="noopener">Hoya Corp (7741 JP)</a>, and Commercial Services (<a href="https://www.smartkarma.com/entities/recruit-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:15070:1" rel="noopener">Recruit 6098 JP).</a> We are not contrarian enough to fall into the banking 'trap', however, the Metals Sector may offer some 'crumbs' of comfort for those in need of a deep value 'fix' (<a href="https://www.smartkarma.com/entities/nippon-steel-sumitomo-metal-corp" target="_blank" data-smartkarma-citation="entities:961:1" rel="noopener">Nippon Steel &amp; Sumitomo Metal (5401 JP)</a>) <div class="content-highlight">In the DETAIL section below, we will review Sector performance, scores and valuation in more detail, as well as Company Results &amp; Revisions and individual stock performance over the previous two weeks, as well as adding some brief comments on <a href="https://www.smartkarma.com/entities/welcia-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:20895:1" rel="noopener">Welcia (3141 JP)</a>, <a href="https://www.smartkarma.com/entities/daiseki-co-ltd" target="_blank" data-smartkarma-citation="entities:2330:1" rel="noopener">Daiseki (9793 JP), </a><a href="https://www.smartkarma.com/entities/yaskawa-electric-corp" target="_blank" data-smartkarma-citation="entities:2458:1" rel="noopener">Yaskawa Electric (6506 JP), </a><a href="https://www.smartkarma.com/entities/pola-orbis-holdings-inc" target="_blank" data-smartkarma-citation="entities:2287:1" rel="noopener">Pola Orbis (4927 JP)</a>, <a href="https://www.smartkarma.com/entities/sekisui-house-ltd" target="_blank" data-smartkarma-citation="entities:4508:1" rel="noopener">Sekisui House (1928 JP)</a>, <a href="https://www.smartkarma.com/entities/keyence-corp" target="_blank" data-smartkarma-citation="entities:3077:1" rel="noopener">Keyence (6861 JP)</a>, <a href="https://www.smartkarma.com/entities/japan-post-insurance-co-ltd" target="_blank" data-smartkarma-citation="entities:840:1" rel="noopener">Japan Post Insurance (7181 JP)</a>, and <a href="https://www.smartkarma.com/entities/obic-co-ltd" target="_blank" data-smartkarma-citation="entities:1273:1" rel="noopener">Obic (4684 JP)</a>.</div>


Source: Japan Analytics
MOVING AVERAGE BREAKOUT - Japanese equities have now risen by 5.1% since the low of 4th June and, since July 1st, the Total Market Value has exceeded the 50-Day Moving Average for the first time since 26th April. Over the last two weeks, the Total Market Value has gained 1.7% in both Yen and US dollar times. For the previous twelve months, the equity market has moved in line with the US dollar/Japanese Yen exchange rate. It remains to be seen how the 'gap' that has opened up in the last month will be closed. Any further strength in the Yen from current levels will likely see the market slip below the 50-Day Moving Average again.
 Source: Japan AnalyticsVALUE TRADED RATIO - The Value Traded Ratio (Value Traded/Total Market Value) has seen two new eighteen-month lows. If the three days around Christmas are excluded, the current apathy towards Japanese equities is the most extreme since 2012 and is confirmed by recent BAML investor surveys. In the past, such periods of inactivity (marked"▲"above)  have preceded changes in market direction, more often upwards rather than downwards and suggest the current rally has more 'legs'. 
 Source: Japan AnalyticsTORAKU INDEX - Conversely, the Toraku advance/decline index is suggesting a degree of caution having breached the 120 'overbought' line for only the third time in eighteen months. Combining this analysis with the Value Traded Ratio, there is scope for a short-term upward move akin to that of October 2018 to be followed by a sharper downward trend into the autumn.  
 Source: Japan AnalyticsVOLUME SCORE TIMELINE - The lull in market turnover is confirmed in the greener 'bias' in our Sector volume timeline. The Retail and Restaurant Sectors are hot as we are in the middle of the quarterly results announcements for February/May/August/November year-end companies. REITs remain the 'go-to' defensive Sector while the Information Technology and Internet Sectors are the 'tema-du-jour' - to mix language metaphors. The 'untouchables' are Metals, Banks, UtilitiesTransportation,  and Multi-Industry.
 Source: Japan Analytics3-MONTH SECTOR CONTRIBUTION - Over the last three months, a long Telcos/short Autos strategy would have yielded 82 basis points of performance. The Retail Sector has responded well to the results released so far led by drugstores Welcia (3141 JP) and Tsuruha (3391 JP), Fast Retailing (9983 JP), and Lawson (2651 JP). Electrical Equipment has suffered from weakness in component stocks Alps Alpine (6770 JP) (-38% over one year), Murata (6981 JP) (see Scott Foster's (Buy on Decline for the Long Term), and Taiyo Yuden (6976 JP), while SMC (6273 JP), Fanuc (6954 JP), and Komatsu (6301 JP) have weighed on the Machinery Sector.
 Source: Japan AnalyticsSECTOR SCORE MATRIX - Arranging our cap-weighted Sector Relative Price Scores and Results &amp; Revisions Scores in a four-quadrant matrix whose extremes are Contrarian Sell, Contrarian Buy, Unrequited Growth, and Ex-Growth suggest profit-taking in Information Technology (OBIC (4684 JP), Other Commerical Products (Hoya Corp (7741 JP), and Commercial Services (Recruit 6098 JP). We are not contrarian enough to fall into the banking 'trap', however, the Metals Sector may offer some 'crumbs' of comfort for those in need of a deep value 'fix' (Nippon Steel &amp; Sumitomo Metal (5401 JP)) In the DETAIL section below, we will review Sector performance, scores and valuation in more detail, as well as Company Results &amp; Revisions and individual stock performance over the previous two weeks, as well as adding some brief comments on Welcia (3141 JP), Daiseki (9793 JP), Yaskawa Electric (6506 JP), Pola Orbis (4927 JP), Sekisui House (1928 JP), Keyence (6861 JP), Japan Post Insurance (7181 JP), and Obic (4684 JP).

🇯🇵 JAPAN • Market Update - Levitating on Thin Air

Cross Asset Strategy

TW3 NORTH ASIA 10-16TH JUNESmartkarma's North Asian Insight providers were overwhelmingly bullish this week. In the Event-Driven space, <a href="https://www.smartkarma.com/profiles/sanghyun-park" target="_blank" data-smartkarma-citation="accounts:354">Sanghyun Park</a> provided an update on the Nexon Sale, and <a href="https://www.smartkarma.com/profiles/michael-causton" target="_blank" data-smartkarma-citation="accounts:2415">Michael Causton</a> gave an excellent overview of the M&amp;A permutations for Japan's listed Drugstore companies. <a href="https://www.smartkarma.com/profiles/douglas-kim" target="_blank" data-smartkarma-citation="accounts:342">Douglas Kim</a> reviews SKC's purchase of KCFT and suggests that the SK Group appears intent on making more big M&amp;A deals where it wants to have a leading presence - in this case in vertically integrating the lithium-ion batteries/components/materials.  Also in Korea, KCGI's move on Hanjin Kal is running into funding problems, while a 3% stake has recently by purchased by Goldman Sachs, with the rumoured end-buyer being Delta Airlines.  Only one IPO was commented on - <a href="https://www.smartkarma.com/profiles/oshadhi-kumarasiri" target="_blank" data-smartkarma-citation="accounts:3584">Oshadhi Kumarasiri</a> casts a dubious eye over the upcoming <a href="https://www.smartkarma.com/entities/shinnihonseiyaku-co-ltd" target="_blank" data-smartkarma-citation="entities:28122:1">Shin-nihon-seiyaku Co Ltd (4931 JP)</a> deal and suggests that management maybe selling out ahead of the peaking of the company main, and so-far only brand, Perfect One.Bullish Equity Bottom-Up comments were published on <a href="https://www.smartkarma.com/entities/nissan-motor-co-ltd" target="_blank" data-smartkarma-citation="entities:72:1">Nissan (7201 JP)</a>, <a href="https://www.smartkarma.com/entities/renesas-electronics-corp" target="_blank" data-smartkarma-citation="entities:15933:1">Renesas Electronics (6723 JP)</a>, <a href="https://www.smartkarma.com/entities/rakuten-inc" target="_blank" data-smartkarma-citation="entities:31:1">Rakuten (4755 JP)</a>, <a href="https://www.smartkarma.com/entities/hitachi-ltd" target="_blank" data-smartkarma-citation="entities:7797:1">Hitachi (6501 JP)</a>, <a href="https://www.smartkarma.com/entities/modec-inc" target="_blank" data-smartkarma-citation="entities:2840:1">Modec(6269 JP)</a>, <a href="https://www.smartkarma.com/entities/nintendo-co-ltd" target="_blank" data-smartkarma-citation="entities:5415:1">Nintendo (7974 JP)</a>, and <a href="https://www.smartkarma.com/entities/life-corp" target="_blank" data-smartkarma-citation="entities:1743:1">Life (8194 JP)</a>. Only <a href="https://www.smartkarma.com/entities/zozo-inc" target="_blank" data-smartkarma-citation="entities:18379:1">ZOZO (3092 JP)</a> saw (another) bearish call.Bullish Thematic &amp; Strategy Insights were released on Japanese Telcos from <a href="https://www.smartkarma.com/profiles/kirk-boodry" target="_blank" data-smartkarma-citation="accounts:1920">Kirk Boodry</a> - highlighting another regulatory-driven boost for Rakuten, while <a href="https://www.smartkarma.com/profiles/sanghyun-park" target="_blank" data-smartkarma-citation="accounts:354">Sanghyun Park</a> delved into the murky world of high-speed trading (HST) in Korea where Citadel and Merrill Lynch have made some controversial moves. In Japan, HST has recently been regulated with all operators required to establish an onshore entity or appoint a local agent and meet stringent reporting requirements governing their trading activities. Perhaps Korea should follow this example? Lastly, this author updated his Relative Price Score data, although these Insights are not summarised below.  <hr><div class="content-highlight">EVENT DRIVEN: BULLISH</div><a href="https://www.smartkarma.com/insights/nexon-sale-current-status-checkup" target="_blank" data-smartkarma-citation="insights:30312">Nexon Sale: Current Status Checkup</a><a href="https://www.smartkarma.com/insights/drug-fuelled-marriages-and-macho-shachos-in-japan" target="_blank" data-smartkarma-citation="insights:30346">Drug-Fuelled Marriages and Macho Shachos in Japan</a><a href="https://www.smartkarma.com/insights/korea-m-a-spotlight-skc-acquires-kcft-for-1-billion" target="_blank" data-smartkarma-citation="insights:30396">Korea M&amp;A Spotlight: SKC Acquires KCFT for $1 Billion</a><div style="text-align: center;" class="content-highlight">EVENT DRIVEN: BEARISH</div><a href="https://www.smartkarma.com/insights/hanjin-kal-special-situation-kcgi-s-takeover-attempt-is-tougher-than-previously-appeared" target="_blank" data-smartkarma-citation="insights:30150">Hanjin Kal Special Situation: KCGI's Takeover Is Tougher than Previously Appeared</a><div style="text-align: center;" class="content-highlight">IPOs &amp; PLACEMENTS: BEARISH</div><a href="https://www.smartkarma.com/insights/shinnihonseiyaku-ipo-perfect-one-not-so-perfect-afterall" target="_blank" data-smartkarma-citation="insights:30407">Shinnihonseiyaku IPO: Perfect One, Not So Perfect Afterall</a><div style="text-align: center;" class="content-highlight">EQUITY BOTTOM UP: BULLISH</div><a href="https://www.smartkarma.com/insights/nissan-chances-of-the-alliance-surviving-have-dimmed-greatly" target="_blank" data-smartkarma-citation="insights:30324">Nissan: Chances of the Alliance Surviving Have Dimmed Greatly</a><a href="https://www.smartkarma.com/insights/renesas-factory-automation-and-aircon-inventory-adjustments-to-take-time" target="_blank" data-smartkarma-citation="insights:30342">Renesas: Factory Automation and Aircon Inventory Adjustments to Take Time</a><a href="https://www.smartkarma.com/insights/rakuten-pay-tops-the-japanese-cashless-war" target="_blank" data-smartkarma-citation="insights:30358">Rakuten Pay Winning the Japanese Cashless War</a>? <a href="https://www.smartkarma.com/insights/hitachi-ltd-6501-jp-share-price-up-on-restructuring-news" target="_blank" data-smartkarma-citation="insights:30304">Hitachi Ltd. (6501 JP): Share Price Up on Restructuring News</a><a href="https://www.smartkarma.com/insights/modec-on-track-to-win-roughly-half-of-its-bids" target="_blank" data-smartkarma-citation="insights:30377">MODEC: On Track to Win Roughly Half of Its Bids</a><a href="https://www.smartkarma.com/insights/switch-production-to-move-outside-of-china-stock-plunges-following-dull-e3-presentation" target="_blank" data-smartkarma-citation="insights:30385">Switch Production to Move From China; Nintendo Plunges After Dull E3 Presentation</a><a href="https://www.smartkarma.com/insights/life-corp-ties-with-amazon-japan" target="_blank" data-smartkarma-citation="insights:30388">Life Corp Ties with Amazon Japan</a><div style="text-align: center;" class="content-highlight">EQUITY BOTTOM UP: BEARISH</div><a href="https://www.smartkarma.com/insights/zozo-the-underlying-operating-metrics-worry-us" target="_blank" data-smartkarma-citation="insights:30391">Zozo: The Underlying Operating Metrics Worry Us</a><div class="content-highlight">THEMATIC &amp; STRATEGY: BULLISH</div><a href="https://www.smartkarma.com/insights/japan-telcos-regulator-to-lower-cap-for-early-mobile-contract-cancellation-positive-for-rakuten" target="_blank" data-smartkarma-citation="insights:30315">Japan Telcos - Lower Cap for Early Cancellation: Positive for Rakuten</a><a href="https://www.smartkarma.com/insights/algorithm-trading-on-kosdaq-citadel-fund-case-checkup" target="_blank" data-smartkarma-citation="insights:30334">Algorithm Trading on KOSDAQ: Citadel Fund Case Checkup</a><div style="text-align: center;" class="content-highlight">THEMATIC &amp; STRATEGY: BEARISH</div><a href="https://www.smartkarma.com/insights/japan-june-relative-price-scores-market-sectors-peer-groups-more-of-the-same" target="_blank" data-smartkarma-citation="insights:30323">🇯🇵 Japan • June Relative Price Scores: Market, Sectors &amp; Peer Groups - More of The Same</a><a href="https://www.smartkarma.com/insights/japan-relative-price-scores-overbought-oversold-companies-june-2019" target="_blank" data-smartkarma-citation="insights:30393">🇯🇵 Japan • Relative Price Scores - Overbought &amp; Oversold Companies - June 2019</a>

TW3 NORTH ASIA 10-16TH JUNESmartkarma's North Asian Insight providers were overwhelmingly bullish this week. In the Event-Driven space, Sanghyun Park provided an update on the Nexon Sale, and Michael Causton gave an excellent overview of the M&amp;A permutations for Japan's listed Drugstore companies. Douglas Kim reviews SKC's purchase of KCFT and suggests that the SK Group appears intent on making more big M&amp;A deals where it wants to have a leading presence - in this case in vertically integrating the lithium-ion batteries/components/materials.  Also in Korea, KCGI's move on Hanjin Kal is running into funding problems, while a 3% stake has recently by purchased by Goldman Sachs, with the rumoured end-buyer being Delta Airlines.  Only one IPO was commented on - Oshadhi Kumarasiri casts a dubious eye over the upcoming Shin-nihon-seiyaku Co Ltd (4931 JP) deal and suggests that management maybe selling out ahead of the peaking of the company main, and so-far only brand, Perfect One.Bullish Equity Bottom-Up comments were published on Nissan (7201 JP), Renesas Electronics (6723 JP), Rakuten (4755 JP), Hitachi (6501 JP), Modec(6269 JP), Nintendo (7974 JP), and Life (8194 JP). Only ZOZO (3092 JP) saw (another) bearish call.Bullish Thematic &amp; Strategy Insights were released on Japanese Telcos from Kirk Boodry - highlighting another regulatory-driven boost for Rakuten, while Sanghyun Park delved into the murky world of high-speed trading (HST) in Korea where Citadel and Merrill Lynch have made some controversial moves. In Japan, HST has recently been regulated with all operators required to establish an onshore entity or appoint a local agent and meet stringent reporting requirements governing their trading activities. Perhaps Korea should follow this example? Lastly, this author updated his Relative Price Score data, although these Insights are not summarised below.  EVENT DRIVEN: BULLISHNexon Sale: Current Status CheckupDrug-Fuelled Marriages and Macho Shachos in JapanKorea M&amp;A Spotlight: SKC Acquires KCFT for $1 BillionEVENT DRIVEN: BEARISHHanjin Kal Special Situation: KCGI's Takeover Is Tougher than Previously AppearedIPOs &amp; PLACEMENTS: BEARISHShinnihonseiyaku IPO: Perfect One, Not So Perfect AfterallEQUITY BOTTOM UP: BULLISHNissan: Chances of the Alliance Surviving Have Dimmed GreatlyRenesas: Factory Automation and Aircon Inventory Adjustments to Take TimeRakuten Pay Winning the Japanese Cashless War? Hitachi Ltd. (6501 JP): Share Price Up on Restructuring NewsMODEC: On Track to Win Roughly Half of Its BidsSwitch Production to Move From China; Nintendo Plunges After Dull E3 PresentationLife Corp Ties with Amazon JapanEQUITY BOTTOM UP: BEARISHZozo: The Underlying Operating Metrics Worry UsTHEMATIC &amp; STRATEGY: BULLISHJapan Telcos - Lower Cap for Early Cancellation: Positive for RakutenAlgorithm Trading on KOSDAQ: Citadel Fund Case CheckupTHEMATIC &amp; STRATEGY: BEARISH🇯🇵 Japan • June Relative Price Scores: Market, Sectors &amp; Peer Groups - More of The Same🇯🇵 Japan • Relative Price Scores - Overbought &amp; Oversold Companies - June 2019

🇰🇷 🇯🇵 That Was The Week That Was North Asia - 10-16th June 2019 @Smartkarma

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Five weeks ago at the end of April just before Golden Week, specialty drugstore retailers <a href="https://www.smartkarma.com/entities/cocokara-fine-inc" target="_blank" data-smartkarma-citation="entities:15447:1">Cocokara Fine (3098 JP)</a> (#7 in sales) and <a href="https://www.smartkarma.com/entities/matsumotokiyoshi-holdings-co" target="_blank" data-smartkarma-citation="entities:2259:1">Matsumotokiyoshi Holdings Co (3088 JP)</a> (#4 or #5 in sales) announced the start of talks aimed at the possible merger of drugstore operations to become the largest drugstore operator in Japan with pro-forma net revenues of ~¥975bn annually (beating leader <a href="https://www.smartkarma.com/entities/welcia-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:20895:1">Welcia Holdings (3141 JP)</a>'s ¥780bn, with an eventual capital merger possible. Talks were set to conclude by September.<a href="https://www.smartkarma.com/profiles/michael-causton" target="_blank" data-smartkarma-citation="accounts:2415">Michael Causton</a>, as is his wont, wrote about the possible tie-up a couple of weeks ago in <a href="https://www.smartkarma.com/insights/matsukiyo-and-cocokara-fine-tie-to-shake-up-drugstore-sector" target="_blank" data-smartkarma-citation="insights:29890">Matsukiyo and Cocokara Fine Tie to Shake up Drugstore Sector</a>. It is worth a read. For a long time, the drugstore sector was the darling of foreign investors because of decent top line growth but post-GFC the industry slowed down for several years before jumping in Fiscal Years 2016 and 2017 (ending in early 2018 in most cases) but he thinks the sector still has growth (see <a href="https://www.smartkarma.com/insights/japan-drugstores-set-to-expand-further" target="_blank" data-smartkarma-citation="insights:28119">Japan Drugstores Set to Expand Further</a>).  His conclusion? <blockquote>Drugstore retailing today is unrecognisable compared to 10 years ago and the speed of change and development is now set to accelerate even further, with M&amp;A a key strategy.</blockquote><h2>The New News</h2>Over the weekend, Sector #6 <a href="https://www.smartkarma.com/entities/sugi-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:9255:1">Sugi Holdings (7649 JP)</a> announced that it had agreed to enter business integration talks with Cocokara Fine over the weekend with the aim to conclude talks by the end of July - at least a month ahead of when the talks between Matsukiyo and Cocokara were scheduled to end. It turns out the announcement between Matsukiyo and Cocokara turned some heads in the industry and Sugi Holdings approached Cocokara just a couple of days later. Interestingly - and highly unusual for Japan - Matsukiyo <a href="https://www.matsumotokiyoshi-hd.co.jp/news/data/7aab7e719783f4e1f894dee904e74820.pdf" target="_blank">said</a> (Japanese-only) today that it was going to continue to negotiate. This makes it a situation where there are two strategic acquirors for one asset (Cocokara) and they are both "friendly." This is practically unheard of in Japan. This sets up a competitive bidding situation for Cocokara which is worthwhile thinking about.<hr><div class="content-remarks">*With apologies to non-Japanese readers, the title is a pun playing on the origins of the company name and the English and Japanese treatment of "fine" and good.</div>

Five weeks ago at the end of April just before Golden Week, specialty drugstore retailers Cocokara Fine (3098 JP) (#7 in sales) and Matsumotokiyoshi Holdings Co (3088 JP) (#4 or #5 in sales) announced the start of talks aimed at the possible merger of drugstore operations to become the largest drugstore operator in Japan with pro-forma net revenues of ~¥975bn annually (beating leader Welcia Holdings (3141 JP)'s ¥780bn, with an eventual capital merger possible. Talks were set to conclude by September.Michael Causton, as is his wont, wrote about the possible tie-up a couple of weeks ago in Matsukiyo and Cocokara Fine Tie to Shake up Drugstore Sector. It is worth a read. For a long time, the drugstore sector was the darling of foreign investors because of decent top line growth but post-GFC the industry slowed down for several years before jumping in Fiscal Years 2016 and 2017 (ending in early 2018 in most cases) but he thinks the sector still has growth (see Japan Drugstores Set to Expand Further).  His conclusion? Drugstore retailing today is unrecognisable compared to 10 years ago and the speed of change and development is now set to accelerate even further, with M&amp;A a key strategy.The New NewsOver the weekend, Sector #6 Sugi Holdings (7649 JP) announced that it had agreed to enter business integration talks with Cocokara Fine over the weekend with the aim to conclude talks by the end of July - at least a month ahead of when the talks between Matsukiyo and Cocokara were scheduled to end. It turns out the announcement between Matsukiyo and Cocokara turned some heads in the industry and Sugi Holdings approached Cocokara just a couple of days later. Interestingly - and highly unusual for Japan - Matsukiyo said (Japanese-only) today that it was going to continue to negotiate. This makes it a situation where there are two strategic acquirors for one asset (Cocokara) and they are both "friendly." This is practically unheard of in Japan. This sets up a competitive bidding situation for Cocokara which is worthwhile thinking about.*With apologies to non-Japanese readers, the title is a pun playing on the origins of the company name and the English and Japanese treatment of "fine" and good.

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. 

Equity Bottom-Up

Two of the country’s largest mass market drugstore operators announced talks about a new tie-up last month. If it happens, <a href="https://www.smartkarma.com/entities/2259" target="_blank" data-smartkarma-citation="entities:2259:1">Matsumotokiyoshi Holdings Co (3088 JP)</a> and <a href="https://www.smartkarma.com/entities/15447" target="_blank" data-smartkarma-citation="entities:15447:1">Cocokara Fine (3098 JP)</a> will jointly run a drugstore operation more than a third larger than any current rival.
In this fast developing sector, such a move will not be taken lying down by rivals and could well stimulate a rush of similar tie-ups over the next year.

Two of the country’s largest mass market drugstore operators announced talks about a new tie-up last month. If it happens, Matsumotokiyoshi Holdings Co (3088 JP) and Cocokara Fine (3098 JP) will jointly run a drugstore operation more than a third larger than any current rival.
In this fast developing sector, such a move will not be taken lying down by rivals and could well stimulate a rush of similar tie-ups over the next year.

Matsukiyo and Cocokara Fine Tie to Shake up Drugstore Sector

Japan

SUGI HOLDINGS CO., LTD. operates a chain of drug stores located mainly in Aichi Prefecture.  The Company sells prescription and nonprescription medicine, cosmetics, health foods, and general merchandise.

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

Sugi Holdings (7649 JP)

Sugi Holding Bull/Bear Pivot, Macro Buy Zone and Rally Projections

Sugi Holdings (7649 JP) exhibits an increasing bias to press on and break 5,000-100 support that will act as the bull/bear line in the sand for the...

Thomas Schroeder

🇯🇵 JAPAN • Market Update - Levitating on Thin Air

MOVING AVERAGE BREAKOUT - Japanese equities have now risen by 5.1% since the low of 4th June and, since July 1st, the Total Market Value has...

Campbell Gunn

🇰🇷 🇯🇵 That Was The Week That Was North Asia - 10-16th June 2019 @Smartkarma

TW3 NORTH ASIA 10-16TH JUNESmartkarma's North Asian Insight providers were overwhelmingly bullish this week. In the Event-Driven space, Sanghyun...

Campbell Gunn

Cocokara Fine は Cocokara いいね*

Five weeks ago at the end of April just before Golden Week, specialty drugstore retailers Cocokara Fine (3098 JP) (#7 in sales) and...

Travis Lundy

Matsukiyo and Cocokara Fine Tie to Shake up Drugstore Sector

Two of the country’s largest mass market drugstore operators announced talks about a new tie-up last month. If it happens, Matsumotokiyoshi...

Michael Causton

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)