Nowcast Inc. ("Nowcast", CEO Masashi Tsujinaka), a subsidiary of Finatext Holdings Ltd. (CEO Ryota Hayashi) who handles analysis of big data, especially in the currently rising niche of alternative data, and Tokyo Stock Exchange, Inc. ("TSE", President & CEO Koichiro Miyahara) will commence Proof of Concept (PoC) testing under the Proof of Concept Program for Utilizing Securities Data (*1) on limited public distribution of mid/small cap stock analyst reports in English by using alternative data (*2).
This PoC will start from November 2019 with distribution of reports to participants for three months. The purpose is to verify whether distributing reports could propose new investment opportunities and contribute to reducing the lack of information for investors.
Background of this PoC
With the globalization of financial and capital markets, the presence of institutional investors from overseas is also increasing in the TSE market. Due to this change, there is a demand for information disclosure in English in order to ensure information disclosure to overseas institutional investors and to allow for cross-referencing across the globe. However, analysts’ coverage of small and medium cap stock is relatively lower compared to that of large caps.
With the aim of solving these problems, Nowcast and TSE will start providing analyst reports that use alternative data. Both will take advantage of natural language processing (*3) and the knowledge of analysts (*4) to compose a large number of reports that would not be possible to accomplish with only ordinary humans, and in turn try to solve the problem of qualitative and quantitative lack of English information on mid/small caps.
Summary of Provided Content
In this PoC, we will use alternative data and pick up listed companies that are likely to get attention from investors. We will automatically generate English reports with short comments about the selected companies based on financial statements and other relevant materials disclosed by said companies. In addition, for stocks that are considered to be of high interest to investors, detailed reports will be drafted separately and provided to the participants.
In order to prepare English reports, we will also utilize the machine translation engine (*5) that is under research and development by JPX.
Figure 1. Process of drafting analyst reports using data
For those interested in applying to participate in PoC
Application is required for participation in the PoC Program for Utilizing Securities Data and this PoC testing . For information on how to apply, please contact the following.
Service Development Group, Information Services, Tokyo Stock Exchange, Inc.
(*1) Launch of Proof of Concept Program for Utilizing Securities Data (2019/4/23)
(*2) Covers data from newspaper articles and social media
(*3) Group company of Nowcast, Finatext, Inc. that will provide the technology
(*4) Group company of Nowcast, LightStream Research (CEO Mio Kato) that will offer its cooperation
Overview the Companies
Nowcast, Inc. http://www.nowcast.co.jp/en
Nowcast is a leading Japanese alternative data company, a Fintech venture from the University of Tokyo that uses big data analysis in “real time analysis of economic statistics such as the consumer price index” and “visualize business strategies”. It was established in February 2015 as the predecessor of "The University of Tokyo Daily Price Index (current Nikkei CPINow)" project at Tsutomu Watanabe Laboratory of Graduate School of Economics of the University of Tokyo. Currently, its offers alternative data services widely such as POS data and credit card data and is supporting asset management and economic research operations of more than 250 companies in Japan and overseas of financial institutions, think tanks, governments, public financial institutions, and hedge funds.
LightStream Research, Inc. https://www.lightstream-research.com/
LightStream Research is an independent research institution mainly targeting Japanese stocks. Founder and CEO Mio Kato used to be an analyst in a US hedge fund and lead equity research business as an executive officer in UZABASE, Inc. It aims to improve analysis accuracy and immediacy by combining interview-based traditional equity research with quantitative data analysis using alternative data.
Finatext Holdings Ltd. https://finatext.com/
Company Name: Finatext Holdings Ltd.
CEO: Ryota Hayashi
Established in: December 2013
Location: 3-6 Sumitomo Real Estate Kojimachi 3rd Building 6th Floor Chiyoda-ku, Tokyo
Business: Financial Service Development, Infrastructure Provision, and Big Data Analysis
Tokyo Stock Exchange, Inc. https://www.jpx.co.jp/english/
TSE operates financial instruments markets in accordance with the Financial Instruments and Exchange Act. The total market capitalization of listed companies on TSE is the third largest among exchanges in the world, the largest in Asia, and has been established as the central market in Japanese securities market. TSE is wholly owned by Japan Exchange Group, Inc. (Code: 8697).