日股 - Oct 16, 2024 (Patreon)

Yen weakened back to Y149.5 (levels last seen in mid-Aug) on the back of more dovish Prime Minister and decreasing odds of a 25bp Fed rate cut in November. Correspondingly US Treasuries and Japan bond yields went up, prompting a move higher across Rate-Sensitives (banks & insurers).

Otherwise, Military+defense stocks topped the leaderboard amid escalating Mideast tensions and on globally rising military defense spending. Retail stocks also notably came in higher driven by earnings-related names – Fast Retailing added over 6% alone last Friday post earnings beat which was driven by both domestic and international business excluding China. Elsewhere, Gaming broadly rose (Konami +8.2%, Nintendo +1.7%, Square Enix +1.4%, Bandai Namco +3.1%) after Kyodo reported that a foreign investment fund is considering to increase investments into the Japan gaming companies

Flow, Sentiment & Positioning

North America investors’ short-term conviction on Japan equities took a cautious turn amid perceived inconsistencies in PM Ishiba’s statements. Further, some investors pointed out a partial shift away from Japanese to Chinese equities, eyeing the recent spike in China stocks. On governance reform, multiple investors said it is worth keeping an eye on whether regional banks effectively move forward on unwinding cross shareholdings, including those held for pure investment purposes.

Watchlist

After the dramatic rally since 2023 and then large JPY carry trade unwind in August 2024, many Japan stocks are still in midst of digesting the volatility. Meaning many stocks have yet to find an equilibrium as buyers and sellers play tug-of-war. I'll avoid stocks with wide trading range and look for ones which have formed longer consolidation and near its upper end of its trading range.

9104 (Shipping) has been consolidating for 10 months. Besides the sharp slump in August, it has conformed to a stable trading range. Note the company reports on 10/31.

4530 (Healthcare): 50ma recently crossed above 200ma. It is not in Stage 2 yet but has the potential to if price continues to stay above these levels.

Disclaimer: The content of this post is solely for entertainment and not investment advice. Any views expressed in the below are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions