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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Quantitative Analysis

<div><p>The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.</p></div><div><p>Hong Kong saw shorts rise on <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a>, <a href="https://www.smartkarma.com/entities/beijing-kuaishou-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:29725:1" rel="noopener">Kuaishou Technology (1024 HK)</a>, <a href="https://www.smartkarma.com/entities/ping-an-healthcare-and-technology-company-limited" target="_blank" data-smartkarma-citation="entities:27008:1" rel="noopener">Ping An Healthcare and Technology Company Limited (1833 HK)</a> and <a href="https://www.smartkarma.com/entities/alibaba-group" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group (9988 HK)</a> while there was short covering on <a href="https://www.smartkarma.com/entities/ping-an-insurance-grp-co-of-china-ltd" target="_blank" data-smartkarma-citation="entities:12880:1" rel="noopener">Ping An Insurance (H) (2318 HK)</a>, <a href="https://www.smartkarma.com/entities/zhongsheng-group-holdings" target="_blank" data-smartkarma-citation="entities:10573:1" rel="noopener">Zhongsheng Group (881 HK)</a>, <a href="https://www.smartkarma.com/entities/aac-technologies-holdings-inc" target="_blank" data-smartkarma-citation="entities:6544:1" rel="noopener">AAC Technologies Holdings (2018 HK)</a> and <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a>. Shorts increased in the Consumer Discretionary, Health Care, Materials and Real Estate sectors, and decreased in the Information Technology, Financials and Consumer Staples sectors.</p></div><div><p>In Japan, stocks that saw the most shorts were <a href="https://www.smartkarma.com/entities/toshiba-corp" target="_blank" data-smartkarma-citation="entities:637:1" rel="noopener">Toshiba Corp (6502 JP)</a>, <a href="https://www.smartkarma.com/entities/asahi-kasei-corp" target="_blank" data-smartkarma-citation="entities:19771:1" rel="noopener">Asahi Kasei (3407 JP)</a>, <a href="https://www.smartkarma.com/entities/olympus-corp" target="_blank" data-smartkarma-citation="entities:356:1" rel="noopener">Olympus Corp (7733 JP)</a> and <a href="https://www.smartkarma.com/entities/monex-group-inc" target="_blank" data-smartkarma-citation="entities:14211:1" rel="noopener">Monex Group Inc (8698 JP)</a> while shorts decreased on <a href="https://www.smartkarma.com/entities/orix-corp" target="_blank" data-smartkarma-citation="entities:9936:1" rel="noopener">Orix Corp (8591 JP)</a>, <a href="https://www.smartkarma.com/entities/nippon-telegraph-telephone-corporation" target="_blank" data-smartkarma-citation="entities:623:1" rel="noopener">NTT (Nippon Telegraph &amp; Telephone) (9432 JP)</a>, <a href="https://www.smartkarma.com/entities/shimano-inc" target="_blank" data-smartkarma-citation="entities:3777:1" rel="noopener">Shimano Inc (7309 JP)</a> and <a href="https://www.smartkarma.com/entities/japan-tobacco-inc" target="_blank" data-smartkarma-citation="entities:13498:1" rel="noopener">Japan Tobacco (2914 JP)</a>. Shorts increased in the Industrials, Materials and Health Care sectors, and decreased in the Communication Services, Financials and Consumer Staples sectors.</p></div><div><p>In Korea, shorts increased on <a href="https://www.smartkarma.com/entities/samsung-electronics-co-ltd" target="_blank" data-smartkarma-citation="entities:191:1" rel="noopener">Samsung Electronics (005930 KS)</a>, <a href="https://www.smartkarma.com/entities/celltrion-inc" target="_blank" data-smartkarma-citation="entities:991:1" rel="noopener">Celltrion Inc (068270 KS)</a>, <a href="https://www.smartkarma.com/entities/hyundai-motor-co" target="_blank" data-smartkarma-citation="entities:155:1" rel="noopener">Hyundai Motor Co (005380 KS)</a> and <a href="https://www.smartkarma.com/entities/sk-hynix-inc" target="_blank" data-smartkarma-citation="entities:16955:1" rel="noopener">SK Hynix (000660 KS)</a> during the week. This was the first week where short increased substantially in Korea and comes a week ahead of the end of the short sell ban.</p></div><div><p>Stocks in Taiwan that saw the highest increase in shorts were <a href="https://www.smartkarma.com/entities/china-steel-corp" target="_blank" data-smartkarma-citation="entities:962:1" rel="noopener">China Steel (2002 TT)</a>, <a href="https://www.smartkarma.com/entities/china-airlines-ltd" target="_blank" data-smartkarma-citation="entities:4591:1" rel="noopener">China Airlines (2610 TT)</a>, <a href="https://www.smartkarma.com/entities/united-microelectronics-corp" target="_blank" data-smartkarma-citation="entities:6450:1" rel="noopener">United Microelectronics Corp (2303 TT)</a> and <a href="https://www.smartkarma.com/entities/taiwan-cement" target="_blank" data-smartkarma-citation="entities:19736:1" rel="noopener">Taiwan Cement (1101 TT)</a> while shorts were covered on <a href="https://www.smartkarma.com/entities/innolux-corp" target="_blank" data-smartkarma-citation="entities:4509:1" rel="noopener">Innolux Corp (3481 TT)</a>, <a href="https://www.smartkarma.com/entities/genius-electronic-optical-co-ltd" target="_blank" data-smartkarma-citation="entities:9632:1" rel="noopener">Genius Electronic Optical (3406 TT)</a>, <a href="https://www.smartkarma.com/entities/delta-electronics-inc" target="_blank" data-smartkarma-citation="entities:12688:1" rel="noopener">Delta Electronics (2308 TT)</a> and <a href="https://www.smartkarma.com/entities/pegatron-corp" target="_blank" data-smartkarma-citation="entities:12852:1" rel="noopener">Pegatron Corp (4938 TT)</a>.</p></div>

The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.Hong Kong saw shorts rise on Meituan (3690 HK), Kuaishou Technology (1024 HK), Ping An Healthcare and Technology Company Limited (1833 HK) and Alibaba Group (9988 HK) while there was short covering on Ping An Insurance (H) (2318 HK), Zhongsheng Group (881 HK), AAC Technologies Holdings (2018 HK) and Tencent Holdings (700 HK). Shorts increased in the Consumer Discretionary, Health Care, Materials and Real Estate sectors, and decreased in the Information Technology, Financials and Consumer Staples sectors.In Japan, stocks that saw the most shorts were Toshiba Corp (6502 JP), Asahi Kasei (3407 JP), Olympus Corp (7733 JP) and Monex Group Inc (8698 JP) while shorts decreased on Orix Corp (8591 JP), NTT (Nippon Telegraph &amp; Telephone) (9432 JP), Shimano Inc (7309 JP) and Japan Tobacco (2914 JP). Shorts increased in the Industrials, Materials and Health Care sectors, and decreased in the Communication Services, Financials and Consumer Staples sectors.In Korea, shorts increased on Samsung Electronics (005930 KS), Celltrion Inc (068270 KS), Hyundai Motor Co (005380 KS) and SK Hynix (000660 KS) during the week. This was the first week where short increased substantially in Korea and comes a week ahead of the end of the short sell ban.Stocks in Taiwan that saw the highest increase in shorts were China Steel (2002 TT), China Airlines (2610 TT), United Microelectronics Corp (2303 TT) and Taiwan Cement (1101 TT) while shorts were covered on Innolux Corp (3481 TT), Genius Electronic Optical (3406 TT), Delta Electronics (2308 TT) and Pegatron Corp (4938 TT).

Asia Shorts: Meituan, Kuaishou, Zhongsheng, Toshiba, Monex, Orix, Samsung, HMC, China Steel, Innolux

Founder/CEO of ROK Advisory, ROK Advisory LLC

Ken S. Kim

Founder/CEO of ROK Advisory

ROK Advisory LLC

ROK is an independent research advisory firm. We guide you to minimize the information gap between foreign and local investors in Northeast Asia with a focus in Korea, Taiwan and Japan.

Independent Research Advisory Firm

Equity Bottom-Up

<p>In Korea the safest way to invest is to align your interest as a minority shareholder with those of the family?  Usually the key asset of the chaebol is apparent but what about SK Group? It seems we have an opportunity to hone in what the key asset is.</p>

In Korea the safest way to invest is to align your interest as a minority shareholder with those of the family?  Usually the key asset of the chaebol is apparent but what about SK Group? It seems we have an opportunity to hone in what the key asset is.

The Chaebol Dilemma - What's the Family Jewel(S)?

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Event-Driven

<p>After the market close on 14 April, <a href="https://www.smartkarma.com/entities/sk-telecom-co-ltd-bbccd86c-474d-4a4d-946d-10e911a225a2" target="_blank" data-smartkarma-citation="entities:395:1" rel="noopener">SK Telecom (017670 KS)</a> finally announced its long awaited decision to create a new holding company for its non-telecom related subsidiaries. The market has been waiting for this decision in the past 5+ years. In the past several weeks, the CEO of SK Telecom has mentioned a very high likelihood of the company announcing a new holdco structure. </p>

After the market close on 14 April, SK Telecom (017670 KS) finally announced its long awaited decision to create a new holding company for its non-telecom related subsidiaries. The market has been waiting for this decision in the past 5+ years. In the past several weeks, the CEO of SK Telecom has mentioned a very high likelihood of the company announcing a new holdco structure. 

SK Telecom Officially Announces a Spin-Off to Create a Holding Company Structure

AlphaSituations-Event/Catalyst Driven Research, AlphaSituations

Robert Sassoon

AlphaSituations-Event/Catalyst Driven Research

AlphaSituations

Since its establishment, AlphaSituations has delivered a track record of outperformance with a hit rate of winners of more than 70% of its portfolio of ideas generating annualized average returns of 20%. In January 2022, AlphaSituations was contracted by Water Tower Research, an investor engagement and stakeholder communication platform to provide coverage of Special Situations

MagnaChip Semiconductor Corp / Event-Driven

<p>On March 26, 2021, it was announced that <a href="https://www.smartkarma.com/entities/magnachip-semiconductor-corp" target="_blank" data-smartkarma-citation="entities:28052:1" rel="noopener">MagnaChip Semiconductor Corp (MX US)</a> had entered into an agreement to be acquired by Wise Road Capital in all cash go-private transaction of $29 per share placing  an equity value of ~$1.4BN on MX. MX is the second largest company in the world after Samsung Electronics in the OLED panel driving chip field, and is listed on the NYSE, while Wise Road Capital is a Chinese owned private equity fund that is focused on investing into high tech companies globally. The transaction is targeted to be completed in the second half of the year.</p><p>With the prevailing share price of $25.29 as at the close of business on April 12, 2021, the spread at ~15% offers a potentially attractive IRR of between 20% and 32% should the transaction close by the end of December or September. This insight lays out  why think the spread indicates a rewarding risk-arb opportunity.</p>

On March 26, 2021, it was announced that MagnaChip Semiconductor Corp (MX US) had entered into an agreement to be acquired by Wise Road Capital in all cash go-private transaction of $29 per share placing  an equity value of ~$1.4BN on MX. MX is the second largest company in the world after Samsung Electronics in the OLED panel driving chip field, and is listed on the NYSE, while Wise Road Capital is a Chinese owned private equity fund that is focused on investing into high tech companies globally. The transaction is targeted to be completed in the second half of the year.With the prevailing share price of $25.29 as at the close of business on April 12, 2021, the spread at ~15% offers a potentially attractive IRR of between 20% and 32% should the transaction close by the end of December or September. This insight lays out  why think the spread indicates a rewarding risk-arb opportunity.

MergerTalk: Magnachip Semiconductor Corp (MX US)-Wising Up To An Attractive Risk-Arb Opportunity

Cross Asset Strategy

<div class="content-highlight">
<p>On 9 April, the <a href="https://www.reuters.com/article/southkorea-nps/update-1-s-koreas-pension-fund-adjusts-rules-to-raise-domestic-equity-allocation-idUSL1N2M20EN" target="_blank" rel="noopener">NPS</a> announced that it will change rules to increase the allocation of Korean stocks, which would be the first time in a decade. This adjustment could be implemented starting next week. This change comes after a lot of pressure by the retail investors.</p>
<p>NPS increased the strategic asset allocation (SAA) limit for domestic equities from the current 2% to 3%, increasing the percentage of Korean stocks it can hold from the current band of 14.8% -18.8% (+/- 2% with 16.8% as base) to 13.8% -19.8% (+/- 3% with 16.8% as base). NPS's target of the domestic equity allocation is 16.8% (of total fund amount). <strong>As a result of this change, the sale of domestic stocks by the NPS is expected to slow down.</strong></p>
</div>


On 9 April, the NPS announced that it will change rules to increase the allocation of Korean stocks, which would be the first time in a decade. This adjustment could be implemented starting next week. This change comes after a lot of pressure by the retail investors.
NPS increased the strategic asset allocation (SAA) limit for domestic equities from the current 2% to 3%, increasing the percentage of Korean stocks it can hold from the current band of 14.8% -18.8% (+/- 2% with 16.8% as base) to 13.8% -19.8% (+/- 3% with 16.8% as base). NPS's target of the domestic equity allocation is 16.8% (of total fund amount). As a result of this change, the sale of domestic stocks by the NPS is expected to slow down.


South Korea

SK Hynix Inc. provides products and services for the electronic components industry. The Company manufactures semiconductors, such as dynamic random access memory (DRAM), NAND flash memory, and static random access memory (SRAM) chips.

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SK Hynix (000660 KS)

Asia Shorts: Meituan, Kuaishou, Zhongsheng, Toshiba, Monex, Orix, Samsung, HMC, China Steel, Innolux

The Insight looks at large short interest movements across HK, Japan, Korea and Taiwan stocks and highlights large increases/decreases in shorts to...

Brian Freitas

The Chaebol Dilemma - What's the Family Jewel(S)?

What is the key asset of the SK Group and how should we play this over the course of time ? Here's at least what we should consider

Ken S. Kim

SK Telecom Officially Announces a Spin-Off to Create a Holding Company Structure

After the market close on 14 April, SK Telecom (017670 KS) finally announced its long awaited decision to create a new holding company for its non...

Douglas Kim

MergerTalk: Magnachip Semiconductor Corp (MX US)-Wising Up To An Attractive Risk-Arb Opportunity

Regulatory concerns on this deal may be prove to be wide of the mark, but in any event that may not matter suggesting that this spread will turn...

Robert Sassoon

NPS Raises Domestic Equity Allocations

NPS increased the strategic asset allocation (SAA) limit for domestic equities from the current 2% to 3%. As a result of this change, the sale of...

Douglas Kim

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