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.

Event-Driven

<ul>
<li>WISE Tour is another fast-growing theme index in Korea with an AUM of ₩0.23T. The next rebalancing will be on April 15. So, the rebalancing trading is on April 14.</li>
<li>Although the flow size of this ETF rebalancing is not substantial, it seems clear that the flow/price (direction) correlation is at a level we should pay attention to.</li>
<li>Those expected to receive a meaningful flow impact at this point are: (LONG) Hana Tour, GKL, &amp; Yong Pyong Resort / (SHORT) Hanjin KAL, Ananti, &amp; SK Rent A Car</li>
</ul>


WISE Tour is another fast-growing theme index in Korea with an AUM of ₩0.23T. The next rebalancing will be on April 15. So, the rebalancing trading is on April 14.
Although the flow size of this ETF rebalancing is not substantial, it seems clear that the flow/price (direction) correlation is at a level we should pay attention to.
Those expected to receive a meaningful flow impact at this point are: (LONG) Hana Tour, GKL, &amp; Yong Pyong Resort / (SHORT) Hanjin KAL, Ananti, &amp; SK Rent A Car


WISE Tour Leisure (TIGER ETF) Rebalancing Preview

<ul>
<li>The TIGER Tour Leisure ETF shows the fastest AUM growth among the local themed ETFs in Korea. It seems clear that this is due to the reopening expectations.</li>
<li>The absolute size of AUM seems small. But the number of components is only 19, and most of them are small caps. So the actual passive impact is not small.</li>
<li>Another noteworthy aspect is that the rebalancing is pretty straightforward. It primarily relies on the float-adjusted market caps. So, the rebalancing estimation visibility is relatively high.</li>
</ul>


The TIGER Tour Leisure ETF shows the fastest AUM growth among the local themed ETFs in Korea. It seems clear that this is due to the reopening expectations.
The absolute size of AUM seems small. But the number of components is only 19, and most of them are small caps. So the actual passive impact is not small.
Another noteworthy aspect is that the rebalancing is pretty straightforward. It primarily relies on the float-adjusted market caps. So, the rebalancing estimation visibility is relatively high.


TIGER WISE Tour Leisure ETF Rebalancing Preview

<ul>
<li>The local street hears KRX has bumped it up to 14.68%. With the 1% rounding applied, it becomes 15%.</li>
<li>It is extremely rare for a Fast Entry to come in with a float market cap of +₩10T. So, we will see significant weight adjustments for the other constituents.</li>
<li>As we move towards the implementation date, we can consider basket-shorting those high-impact names for LG Energy's long hedge.</li>
</ul>


The local street hears KRX has bumped it up to 14.68%. With the 1% rounding applied, it becomes 15%.
It is extremely rare for a Fast Entry to come in with a float market cap of +₩10T. So, we will see significant weight adjustments for the other constituents.
As we move towards the implementation date, we can consider basket-shorting those high-impact names for LG Energy's long hedge.


LG Energy's KOSPI 200 Float Is 15%: Weight Adjustment Trading for Other Constituents

HD Hyundai Heavy Industries  / Event-Driven

<ul>
<li>The stocks we need to pay attention to are Hyundai Heavy Industries and Myoung Shin Industries.</li>
<li>HHI's 4.54% lockup release should cause short-term volatility in the price. We need to consider a setup that builds up a short position right after the KOSPI 200 effective date.</li>
<li>Myoung Shin Industrial's KOSPI 200 passive flow effect will be less than initially expected. Then, we need to look at the timing of entering the short position after December 10th.</li>
</ul>


The stocks we need to pay attention to are Hyundai Heavy Industries and Myoung Shin Industries.
HHI's 4.54% lockup release should cause short-term volatility in the price. We need to consider a setup that builds up a short position right after the KOSPI 200 effective date.
Myoung Shin Industrial's KOSPI 200 passive flow effect will be less than initially expected. Then, we need to look at the timing of entering the short position after December 10th.


KOSPI Major Lockup Releases: Hyundai Heavy Industries & Myoung Shin Industrial

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

It has been reported in the past few days that <a href="https://finance.naver.com/item/news_read.nhn?article_id=0000715983&amp;office_id=366&amp;code=180640&amp;sm=title_entity_id.basic" target="_blank" rel="noopener">Cho Hyun-Ah</a> sold 12 billion won worth ($1.1 million) of <a href="https://www.smartkarma.com/entities/hanjin-kal-corp" target="_blank" data-smartkarma-citation="entities:19086:1" rel="noopener">Hanjin KAL Corp (180640 KS)</a> shares in 2021. It appears that one of the reasons why she may have sold these shares was to pay for the inheritance tax of the late Hanjin Group Chairman Cho Yang-Ho. Cho Hyun-Ah needs to pay a total of nearly 60 billion won in inheritance taxes, broken down into 12 billion won payment per year.Although Korean Air has been infused with new, fresh capital, it is not all certain whether the company will best use the resources in the best ways possible. In other words, she may be waiting for her brother to make another mistake in managing the company. If one or two years later if enough shareholders decide that Cho Won-Tae and his assigned managers are not acting in the best interest of the shareholders, then his sister Cho Hyun-Ah may be waiting for an another shareholders battle against his brother. All in all, from a pair-trade perspective, the short term momentum is on the side of long Hanjin Kal and short Korean Air, which has worked so far since the end of the ban on many Korean stocks starting May 3. Given the huge price disparity between these two stocks in the past year, we think that this could be a nice trade as many investors look to close the gap on the two prices which have diverged greatly in the past year.

It has been reported in the past few days that Cho Hyun-Ah sold 12 billion won worth ($1.1 million) of Hanjin KAL Corp (180640 KS) shares in 2021. It appears that one of the reasons why she may have sold these shares was to pay for the inheritance tax of the late Hanjin Group Chairman Cho Yang-Ho. Cho Hyun-Ah needs to pay a total of nearly 60 billion won in inheritance taxes, broken down into 12 billion won payment per year.Although Korean Air has been infused with new, fresh capital, it is not all certain whether the company will best use the resources in the best ways possible. In other words, she may be waiting for her brother to make another mistake in managing the company. If one or two years later if enough shareholders decide that Cho Won-Tae and his assigned managers are not acting in the best interest of the shareholders, then his sister Cho Hyun-Ah may be waiting for an another shareholders battle against his brother. All in all, from a pair-trade perspective, the short term momentum is on the side of long Hanjin Kal and short Korean Air, which has worked so far since the end of the ban on many Korean stocks starting May 3. Given the huge price disparity between these two stocks in the past year, we think that this could be a nice trade as many investors look to close the gap on the two prices which have diverged greatly in the past year.

Hanjin Kal: Why Is Cho Hyun-Ah Selling A Partial Stake?

South Korea

Hanjin KAL Corporation is a holding company. The Company, through its subsidiaries, engages in airline, hotel, and travel related services. Hanjin also invests in real estates.

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Hanjin KAL Corp (180640 KS)

WISE Tour Leisure (TIGER ETF) Rebalancing Preview

This post previews the upcoming rebalancing of the WISE Tour Leisure (TIGER ETF), effective April 15. The screening at this point delivers 3 LONG...

Sanghyun Park

TIGER WISE Tour Leisure ETF Rebalancing Preview

TIGER Tour Leisure ETF's passive impact should be of a meaningful level given its AUM size. So, we need to consider a long/short setup as a basket...

Sanghyun Park

LG Energy's KOSPI 200 Float Is 15%: Weight Adjustment Trading for Other Constituents

KRX has bumped up LG Energy's float to 15%. As a result, we will see a more substantial passive impact on LG Energy. Also, we should see...

Sanghyun Park

KOSPI Major Lockup Releases: Hyundai Heavy Industries & Myoung Shin Industrial

This post looks at the significant lockup releases on KOSPI for this month: Hyundai Heavy Industries and Myoung Shin Industrial.

Sanghyun Park

Hanjin Kal: Why Is Cho Hyun-Ah Selling A Partial Stake?

From a pair-trade perspective, the short term momentum is on the side of long Hanjin Kal and short Korean Air, which has worked so far since the...

Douglas Kim

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