Short sellers eye Japanese electronics firms
12 March 2015 London
Image: Shutterstock
Consolidation and risk separation are trending among Japanese electronics manufacturers, according to Markit, as firms with concentrated consumer exposure are facing strong pressure from component commoditisation and smartphones.
Sharp, Casio and Nikon currently make up the top three most shorted stocks on the Nikkei 225 despite renewed government efforts to actively help the country’s exporters by actively devaluing the yen.
Analyst at Markit, Relte Schutte, commented: “Sharp has borne the brunt of the recent negative sentiment. Since the end of September 2014, the proportion of shares outstanding on loan for the Osaka-based firm has tripled to 13.9 percent, while its stock has retreated by a quarter.”
“Since its formation in March 2014 by Sony, Toshiba and Hitachi, Japan Display has effectively rolled up underperforming display businesses across the industry; a move which mirrors steps taken by the banking industry in the wake of the financial crisis,“ he added.
These industry movements have effectively left Sharp exposed to the weakening market for displays, developments which short sellers have capitalised on. Schutte said that his trend is set to continue in the near term as the company has quashed rumours of a potential tie-up with Japan Display.
News flow coming from the firm has turned around as of late with the announcement that it was building a new plant under Apple’s auspices to supply screens for iPhones from 2016. Short sellers have since retreated from their highs and the firm’s shares have rebounded strongly.
In comparison to Sharp, Casio Computer has delivered strong sales and earnings growth since 2013 with continued growth forecast up to 2016.
“Short sellers have not been convinced by Casio’s recent performance translating into future success. Shares out on loan have increased from 2 percent in March of last year to 16 percent in August and have hovered around that mark since, despite a recent share price surge,” explained Schutte.
The most short sold of the three firms is Nikon, which has just under 16 percent of shares out on loan after the company announced guidance for the current financial year which missed analyst expectations.
Nikon recently announced that operating income in the instruments division was under pressure, and competitor Cannon has recently reported weakness in its camera division caused by the ever increasing appeal of smartphones.
Short sellers continue to bet on the negative impact of smart phones on electronic component suppliers in Japan.
Sharp, Casio and Nikon currently make up the top three most shorted stocks on the Nikkei 225 despite renewed government efforts to actively help the country’s exporters by actively devaluing the yen.
Analyst at Markit, Relte Schutte, commented: “Sharp has borne the brunt of the recent negative sentiment. Since the end of September 2014, the proportion of shares outstanding on loan for the Osaka-based firm has tripled to 13.9 percent, while its stock has retreated by a quarter.”
“Since its formation in March 2014 by Sony, Toshiba and Hitachi, Japan Display has effectively rolled up underperforming display businesses across the industry; a move which mirrors steps taken by the banking industry in the wake of the financial crisis,“ he added.
These industry movements have effectively left Sharp exposed to the weakening market for displays, developments which short sellers have capitalised on. Schutte said that his trend is set to continue in the near term as the company has quashed rumours of a potential tie-up with Japan Display.
News flow coming from the firm has turned around as of late with the announcement that it was building a new plant under Apple’s auspices to supply screens for iPhones from 2016. Short sellers have since retreated from their highs and the firm’s shares have rebounded strongly.
In comparison to Sharp, Casio Computer has delivered strong sales and earnings growth since 2013 with continued growth forecast up to 2016.
“Short sellers have not been convinced by Casio’s recent performance translating into future success. Shares out on loan have increased from 2 percent in March of last year to 16 percent in August and have hovered around that mark since, despite a recent share price surge,” explained Schutte.
The most short sold of the three firms is Nikon, which has just under 16 percent of shares out on loan after the company announced guidance for the current financial year which missed analyst expectations.
Nikon recently announced that operating income in the instruments division was under pressure, and competitor Cannon has recently reported weakness in its camera division caused by the ever increasing appeal of smartphones.
Short sellers continue to bet on the negative impact of smart phones on electronic component suppliers in Japan.
NO FEE, NO RISK
100% ON RETURNS If you invest in only one securities finance news source this year, make sure it is your free subscription to Securities Finance Times
100% ON RETURNS If you invest in only one securities finance news source this year, make sure it is your free subscription to Securities Finance Times
