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雷达卡
Highlights of the Week
• Market: The market suffered something of a setback in the second half of the
week, as the US consumer sentiment unexpectedly fell and unemployment rate
climbed to 9.5%. With the June manufacturing ISMPMI rising for the sixth
consecutive month, however, we believe that the economic recovery in still
intact. The VIX bounced off the low of 25, and the Japanese CDS spread
widened further, approaching the levels not seen since mid-May.
• What equity offerings may imply: As we are witnessing a flood of equity
offerings (or announcements thereof) lately, we will examine possible impact on
the market in this report. As for impact on individual stocks, generally it would
be more likely negative than positive at least initially (Daiwa Securities share
price fell more than 12% on Monday after public offering announcement). For
further statistics, we refer investors to our past publication (“Equity Derivatives
Review – Shares vs. Convertibles,” May 21, 2007).
• Election and the stock market: Japan’s PM Taro Aso is mulling dissolving the
House of Representatives before the current term matures on Sept 10, according
to the press (Dow Jones Newswire). Elections raise uncertainty and thus are
often deemed source of volatility, although our past findings on Japan’s upper
house elections failed to substantiate this claim (“Equity Derivatives Review –
Looking back at 2005: It’s not election, It’s currency,” Jun 25, 2007). This week,
we examine past lower house elections and see if we can make any coherent
argument on the impact of the upcoming election on the market and volatility.
• Calendar spread: Assuming that we are going to have a range-bound market
near-term due to the supply-demand imbalance stemming from equity offerings,
but are going to have a resumption of a bull market afterwards, the calendar
spread offers a less costly way to attain upside exposure. We suggest a 1M-3M
or 1M-6M Nikkei calendar spread at this time.
• Bullish on real estate: On June 30, J.P. Morgan’s Japan real estate analyst,
Hirokazu Anai, upgraded his sector stance from neutral to bullish, raising target
prices of several key real estate companies (“Real Estate Sector: Watch for
Catalyst in Next Six Months,” Hirokazu Anai, Jun 30, 2009). To take advantage
of the improved upside, we would recommend risk-reversals on Mitsui-Fudosan,
Mitsubishi Estate, and Sumitomo Realty and Development.
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