What Worked Japan - 13May 2016 - Move in to ROE/ROIC and PBR continues to underperform

What Worked – Earnings Season is always fun as you have no idea what will drive the market. This week was all about ROE and ROIC. ROE performance has continued to get stronger over the last two week. This week high ROE names that did well were Lion Corp up 24%, Kyowa Exeo up 22% and NEXON up 18%. Debt to Equity has also done well in the last 3 week, but to a lesser degree. Pilot Corp was up 22% and Sumitomo Heavy Industries was up 16%.

Low PBR names continued to get hurt. In fact, PBR (Japan’s historically strongest factor) has not consistently worked since last August. Low PBR names that were hurt this week were Tokyo Ohka Kogyo down 17%, Nippon Kayaku down 11% and Ushio down 9%. Also looking at momentum, names that were up over the last year continued to go up this week.  Meiji Holdings was up 16% and Sysmex was up 15%.

Who Moved – 44 names moved on volume this week. A pretty good volume week for Japan. On the positive side, Lion Corp was up 24%, Kyowa Exeo was up 22% and Pilot was up 22% all on strong volume. On the other side, Benesse Holdings was down 20%, Tokyo Ohka Kogyo was down 17% and Casio Computer was down 14%.


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