Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

<ul>
<li>KRX plans to launch KRX/S&amp;P ESG High Dividends Index on 4 October. This index will be composed of stocks in KOSPI 200 which have high dividend yields and ESG scores.</li>
<li>We provided a list of 20 stocks in KOSPI with high dividend yields with at least 500 billion won in market cap and those that have higher ESG scores.</li>
<li>Amid a major downturn in the global stock markets, there is a greater emphasis on the preservation of capital and increasing capital allocation to higher dividend yielding stocks.</li>
</ul>


KRX plans to launch KRX/S&amp;P ESG High Dividends Index on 4 October. This index will be composed of stocks in KOSPI 200 which have high dividend yields and ESG scores.
We provided a list of 20 stocks in KOSPI with high dividend yields with at least 500 billion won in market cap and those that have higher ESG scores.
Amid a major downturn in the global stock markets, there is a greater emphasis on the preservation of capital and increasing capital allocation to higher dividend yielding stocks.


Launch of KRX/S&P ESG High Dividends Index

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>Juice for cash &amp; carry arbitrage doesn't seem like much. Several names in contango, but the basis widening isn't at a sufficiently arb-tradable level.</li>
<li>Reverse cash &amp; carry isn't all that attractive either, but it certainly does offer more juice, even with borrow fees. Ssangyong C&amp;E, SKT, Shinhan, and KB deserve our attention.</li>
<li>A bit uncertain is whether the pattern of "LONG Spot until ex-dividend and Conversion to Short" through cash &amp; carry will repeat itself this time.</li>
</ul>


Juice for cash &amp; carry arbitrage doesn't seem like much. Several names in contango, but the basis widening isn't at a sufficiently arb-tradable level.
Reverse cash &amp; carry isn't all that attractive either, but it certainly does offer more juice, even with borrow fees. Ssangyong C&amp;E, SKT, Shinhan, and KB deserve our attention.
A bit uncertain is whether the pattern of "LONG Spot until ex-dividend and Conversion to Short" through cash &amp; carry will repeat itself this time.


3Q Dividend Estimates of Those with SSF for Cash & Carry Arb in Korea

Posco International Corporation / Event-Driven

<ul>
<li>On 12 August, Posco International stated that it plans to merge with one of POSCO Holdings' energy affiliate called POSCO Energy which is a major LNG provider in Korea.</li>
<li>We believe the merger between POSCO International and POSCO Energy is  value enhancing. The shareholders of POSCO International are getting a sweet deal in POSCO Energy at attractive valuations.</li>
<li>This M&amp;A deal is likely to boost the market cap of the combined companies and raise the rank of POSCO International in important indices such as KOSPI200. </li>
</ul>


On 12 August, Posco International stated that it plans to merge with one of POSCO Holdings' energy affiliate called POSCO Energy which is a major LNG provider in Korea.
We believe the merger between POSCO International and POSCO Energy is  value enhancing. The shareholders of POSCO International are getting a sweet deal in POSCO Energy at attractive valuations.
This M&amp;A deal is likely to boost the market cap of the combined companies and raise the rank of POSCO International in important indices such as KOSPI200. 


POSCO International + POSCO Energy = A Value Enhancing M&A Deal

<ul>
<li>POSCO Holdings announced it would cancel ₩567B worth of 2.6M treasury shares last Friday. It represents 3% of the shares outstanding, reducing the treasury shares from 13% to 10%.</li>
<li>With this cancellation, the float change reaches 5%p, triggering an adjustment from 68% to 73% in the upcoming cycle, just in time for the FnGuide Top 10's December rebalancing.</li>
<li>As a result, POSCO Holdings suddenly becomes a strong contender to beat KB Financial in the FnGuide Top 10 rebalancing as they will be in a very tight race.</li>
</ul>


POSCO Holdings announced it would cancel ₩567B worth of 2.6M treasury shares last Friday. It represents 3% of the shares outstanding, reducing the treasury shares from 13% to 10%.
With this cancellation, the float change reaches 5%p, triggering an adjustment from 68% to 73% in the upcoming cycle, just in time for the FnGuide Top 10's December rebalancing.
As a result, POSCO Holdings suddenly becomes a strong contender to beat KB Financial in the FnGuide Top 10 rebalancing as they will be in a very tight race.


POSCO Holdings Stock Cancellation: Tiggering a 5%p Float Change for FnGuide Top 10 ETF

<ul>
<li>We still have the chance to become eligible. We will still receive the rights if we buy Posco International next Tuesday. But we will exercise them at ₩20,590, NOT ₩27,801.</li>
<li>Given that there is little cancellation risk, we can capitalize on the price falling below the appraisal price by opening both Long and Short at the same price.</li>
<li>We close Short if the price goes under ₩20,590 and fix the arb spread by exercising the rights with Long.</li>
</ul>


We still have the chance to become eligible. We will still receive the rights if we buy Posco International next Tuesday. But we will exercise them at ₩20,590, NOT ₩27,801.
Given that there is little cancellation risk, we can capitalize on the price falling below the appraisal price by opening both Long and Short at the same price.
We close Short if the price goes under ₩20,590 and fix the arb spread by exercising the rights with Long.


Posco International Merger: Deal Structure & Arbitrage Dynamics

South Korea

POSCO Holdings Inc. manufactures and distributes steel products. The Company produces crude steel, hot rolled steel, cold rolled steel, stainless steel, steel plates, wire rods, galvanized steel, electrical steel, and other related products. POSCO Holdings markets its products worldwide.

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POSCO Holdings (005490 KS)

Launch of KRX/S&P ESG High Dividends Index

KRX plans to launch KRX/S&P ESG High Dividends Index on 4 October. This index will be composed of stocks in KOSPI 200 which have high dividend...

Douglas Kim

3Q Dividend Estimates of Those with SSF for Cash & Carry Arb in Korea

This post provides the market consensus estimates for the 3Q dividends of those with single-stock futures in Korea and looks into the cash-and...

Sanghyun Park

POSCO International + POSCO Energy = A Value Enhancing M&A Deal

We believe the merger between POSCO International and POSCO Energy is value enhancing. The shareholders of POSCO International are getting a sweet...

Douglas Kim

POSCO Holdings Stock Cancellation: Tiggering a 5%p Float Change for FnGuide Top 10 ETF

This post investigates the passive impact of POSCO Holdings' stock cancellation on the FnGuide Top 10 rebalancing in December.

Sanghyun Park

Posco International Merger: Deal Structure & Arbitrage Dynamics

This post investigates Posco International's merger with Posco Energy, officially announced last Friday, and explores arbitrage opportunities...

Sanghyun Park

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