Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: sense who wrote (168761)	2/19/2021 1:13:32 AM
From: TobagoJack	Respond to of 218862

Re <<western civilization>> Unclear the idiots are not also taking charge of the east. I think the pandemic of idiocy is global ... bloomberg.com One Uniqlo Share for $1,000 Sparks Concern Over Nikkei Dominance Gearoid Reidy Inside a Uniqlo store in Tokyo. Photographer: Noriko Hayashi/BloombergFast Retailing operator increasingly influences the Nikkei 225 Shareholders are cheering the record share price of Fast Retailing Co., the operator of casual fashion giant Uniqlo that’s just become the most valuable apparel retailer in the world. But some other market observers are sounding notes of caution over the stock’s ever-increasing influence on Japan’s Nikkei 225 Stock Average, as technical changes caused by its recent highs raise its already-outsized impact on the blue-chip gauge. A fivefold increase in Fast Retailing’s tick size -- the minimum amount by which the stock can move up or down -- and a surge in its weighting in the index mean the Nikkei’s rise is increasingly intertwined with that of the casual clothing firm, even as Japanese stocks look to test record bubble-era highs. Fast Retailing has risen about 80% in the past 12 months and the price per share broke the 100,000 yen ($946) level on Tuesday, making it the only listed company in Japan to trade at such a value. That triggered a technical change, as under Japan Exchange Group Inc. rules the tick size on stocks trading above 100,000 yen jumps to 50 yen. “Each step gets bigger. Up to 99,999 yen it only moved 10 yen a tick,” said investor Taketsugu Agari. “The Nikkei 225 may become ever-more dominated by moves in Fast Retailing.” High TimesThe price of a single share of Fast Retailing has passed 100,000 yen, making it the most expensive stock in Japan Source: Bloomberg In the last six months alone, the apparel maker has contributed more than 1,600 points to the Nikkei 225, single-handedly responsible for nearly a quarter of the index’s 31% gain in that time. Junichi Hashimoto, senior quants analyst at Daiwa Securities Co., says that while the tick size is unlikely to be an issue in the short term, it could be a concern over longer periods. “If the price is consistently high, when it falls the impact will be greater, and the volatility could increase,” he said. That’s further compounded by Fast Retailing’s outsized weighting on the index. The Nikkei 225 is a price-weighted gauge, meaning that the arbitrary price of an individual share determines how much of the index a company makes up. At 100,000 yen a share, Fast Retailing is a giant. That weighting stands now at a record 12.8%, higher than the largest weighting on any other developed market benchmark. While Fast Retailing has been the dominant force on the Nikkei 225 for a decade, its proportion on the index has surged along with its share price, forcing passive investors to buy more of the stock as the Nikkei gains. The biggest stock on the Dow Jones Industrial Average, UnitedHealth Group Inc., makes up 6.8% of that price-weighted measure. On Japan’s broader Topix index, Fast Retailing is the 41st largest weighting, making up just 0.5%. Weight WatchersFast Retailing's weighting in the Nikkei is higher than the top-weighted stock in other developed benchmarks Source: Bloomberg That has sparked concern among some such as Takashi Ito, a senior strategist at Nomura Securities Co., who notes that what goes up could also come down -- fast. “If long-term investors change their outlook and decide to cut back on their holdings of Fast Retailing, then the Nikkei 225 could unravel pretty rapidly,” he said. One option to fix this would be a stock split -- the method that drove Apple Inc.’s share of the Dow Jones from around 12% to less than 3% last year, in turn triggering a boost in its share price by making it easier for retail investors to buy in. Apple’s Split to End Dominion of Dow Average’s Biggest Stock But Fast Retailing has long demurred on the idea of splitting its shares. In response to questions from Bloomberg News, the company said that it wasn’t considering a stock split, directing investors to a periodic statement on the appropriateness of the size of its investment units. Still others are less concerned about what’s long been known as an issue with price-weighted measures such as the Nikkei. Makoto Sengoku, a market analyst at Tokai Tokyo Research Institute, argues that criticism of Fast Retailing for skewing the Nikkei 225 “isn’t anything new.” “You also have to give credit to Fast Retailing for having reached this share level,” he said. Sent from my iPhone