Korea / Special Sits, Pairs, Index Rebalancing, Clepsydra Capital

Sanghyun Park

Korea / Special Sits, Pairs, Index Rebalancing

Clepsydra Capital

Investigate special situations, pairs, and index rebalancing trades in Korea.

Index Rebalance

<ul>
<li>March 5 price action overshot passive impact. Theme-trade momentum, one-way institutional flows, and ETF rebalancing (~10% turnover) juiced the move—Hanwha Ocean -5.41%, Samsung Heavy +5.34%, HD KSOE +6.58%.</li>
<li>June’s rebalance gets spicier—another ETF, ARIRANG K-Defense ETF (449450 KS), also runs the same 20% reversion on June 13, doubling the flow impact and setting up amplified price action.</li>
<li>Key 20% reversion hits: Hanwha Ocean (SOL Shipbuilding) &amp; Hanwha Aerospace (PLUS K-Defense). ~5%p passive outflows (~0.1x DTV) expected, with Hanwha Ocean facing double impact from both ETFs.</li>
</ul>


March 5 price action overshot passive impact. Theme-trade momentum, one-way institutional flows, and ETF rebalancing (~10% turnover) juiced the move—Hanwha Ocean -5.41%, Samsung Heavy +5.34%, HD KSOE +6.58%.
June’s rebalance gets spicier—another ETF, ARIRANG K-Defense ETF (449450 KS), also runs the same 20% reversion on June 13, doubling the flow impact and setting up amplified price action.
Key 20% reversion hits: Hanwha Ocean (SOL Shipbuilding) &amp; Hanwha Aerospace (PLUS K-Defense). ~5%p passive outflows (~0.1x DTV) expected, with Hanwha Ocean facing double impact from both ETFs.


Hunting for Outsized Moves in Off-The-Radar Korean Sector ETFs: SOL Shipbuilding & PLUS K-Defense

Event-Driven

<ul>
<li>This 20% reversion and 30% cap setup creates solid flow trades. With just 13 holdings, SOL ETF’s weight swings hard—Hanwha Ocean's already pushing 27% post-rebal.</li>
<li>Constituent changes drive the biggest dislocations—still the main setup. "The other 10" names are FICS-screened by market cap (May/Nov cut), making rotations fairly predictable.</li>
<li>With AUM only ramping recently, this ETF is still in price discovery mode. Pre-positioning ahead of flows has juice, making it a prime target for aggressive flow trading.</li>
</ul>


This 20% reversion and 30% cap setup creates solid flow trades. With just 13 holdings, SOL ETF’s weight swings hard—Hanwha Ocean's already pushing 27% post-rebal.
Constituent changes drive the biggest dislocations—still the main setup. "The other 10" names are FICS-screened by market cap (May/Nov cut), making rotations fairly predictable.
With AUM only ramping recently, this ETF is still in price discovery mode. Pre-positioning ahead of flows has juice, making it a prime target for aggressive flow trading.


SOL Shipbuilding Top 3 ETF Throws off Some Serious Flow Trading Plays with Plenty of Juice

<ul>
<li>KEXIM ignoring this premium could be a breach of duty, making Hanwha Ocean a prime short play. With 20% of shares, past cases suggest a 5-10% pullback.</li>
<li>This play’s tougher than HMM’s. Without step-ups, timing the conversion is tricky. Early redemption’s unlikely, so the focus is on when KEXIM pulls the trigger on the conversion.</li>
<li>No hints from KEXIM on the CB conversion yet, so loading up aggressively could be risky. We’ll likely need to wait for a signal from KEXIM before jumping in.</li>
</ul>


KEXIM ignoring this premium could be a breach of duty, making Hanwha Ocean a prime short play. With 20% of shares, past cases suggest a 5-10% pullback.
This play’s tougher than HMM’s. Without step-ups, timing the conversion is tricky. Early redemption’s unlikely, so the focus is on when KEXIM pulls the trigger on the conversion.
No hints from KEXIM on the CB conversion yet, so loading up aggressively could be risky. We’ll likely need to wait for a signal from KEXIM before jumping in.


Flagging the Hanwha Ocean CB Conversion Risk (20% of Shares Out)

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Douglas Research Advisory

Equity Bottom-Up

<ul>
<li>In the Korean stock market, one of the biggest positive catalysts of Donald Trump becoming the next United States President has been the shipbuilding sector.</li>
<li>About 20 years, the United States had a dominant naval superiority versus China. That is no longer the case. </li>
<li>There is a likely scenario of the US Navy increasingly outsourcing the construction and after-service of its fleet to Korean companies such as Hanwha Ocean and HD Hyundai Heavy Industries.</li>
</ul>


In the Korean stock market, one of the biggest positive catalysts of Donald Trump becoming the next United States President has been the shipbuilding sector.
About 20 years, the United States had a dominant naval superiority versus China. That is no longer the case. 
There is a likely scenario of the US Navy increasingly outsourcing the construction and after-service of its fleet to Korean companies such as Hanwha Ocean and HD Hyundai Heavy Industries.


Trump Catalyst - Korean Shipbuilding Sector

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Korea Stock Exchange KOSPI 200 / Event-Driven

<ul>
<li>Since short selling was banned in November 2023, short interest has plunged in Korea as shorts were covered. Markets have not done much over the last 16 months though. </li>
<li>Foreign investor holdings have dropped from 32.05% in July to 28.57%. The top 25 stocks bought by foreign investors outperformed the top 25 stocks sold by 128% in 16 months.</li>
<li>There will be trade opportunities across indices, pref/ords, index migrations and deletions, potential market upgrades and overvalued stocks being sold.</li>
</ul>


Since short selling was banned in November 2023, short interest has plunged in Korea as shorts were covered. Markets have not done much over the last 16 months though. 
Foreign investor holdings have dropped from 32.05% in July to 28.57%. The top 25 stocks bought by foreign investors outperformed the top 25 stocks sold by 128% in 16 months.
There will be trade opportunities across indices, pref/ords, index migrations and deletions, potential market upgrades and overvalued stocks being sold.


Korea: Short Selling Is Back in March; Trade Ideas

South Korea

Hanwha Ocean Co., Ltd. operates as a shipbuilding and offshore company. The Company provides floating structure construction, steel wire drying, commercial vessels, specialty vessels, gas carrier, tanker, containership, ro ro, bulk carrier, submarine, warship, auxiliaries, cruise ships, and ferries manufacturing services. Hanwha Ocean also offers onshore plants services.

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Hanwha Ocean (042660 KS)

Hunting for Outsized Moves in Off-The-Radar Korean Sector ETFs: SOL Shipbuilding & PLUS K-Defense

This post dives into hunting for outsized moves in off-the-radar Korean sector ETFs: SOL Shipbuilding and PLUS K-Defense.

Sanghyun Park

SOL Shipbuilding Top 3 ETF Throws off Some Serious Flow Trading Plays with Plenty of Juice

The Shipbuilding Top 3 ETF’s ad-hoc rebalance (25% reversion after hitting the 30% cap) is locked in. Hanwha Ocean blew past 30%, so the rebal...

Sanghyun Park

Flagging the Hanwha Ocean CB Conversion Risk (20% of Shares Out)

This post highlights the Hanwha Ocean CB conversion risk, with nearly 20% of the shares outstanding potentially being converted.

Sanghyun Park

Trump Catalyst - Korean Shipbuilding Sector

The Korean shipbuilding sector (especially shipbuilding companies including Hanwha Ocean and HD Hyundai Heavy Industries) is a major beneficiary of...

Douglas Kim

Korea: Short Selling Is Back in March; Trade Ideas

Short selling in Korea commences from Monday. There will be a lot of interest in shorting stocks/sectors depending on how they have performed since...

Brian Freitas

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