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>Samsung SDI and LG Chem are expected to be newly included in the index, while Hana Financial and KT&amp;G Corporation are predicted to be excluded.</li>
<li>The correlation between the price movement and the flow direction on the rebalancing trading day of constituent changes from the past reviews was quite high.</li>
<li>We can set the price impact expectation for the upcoming review even more aggressively, given that the size of the flow x DTV is more significant than in previous cases.</li>
</ul>


Samsung SDI and LG Chem are expected to be newly included in the index, while Hana Financial and KT&amp;G Corporation are predicted to be excluded.
The correlation between the price movement and the flow direction on the rebalancing trading day of constituent changes from the past reviews was quite high.
We can set the price impact expectation for the upcoming review even more aggressively, given that the size of the flow x DTV is more significant than in previous cases.


Price/Flow Impact on Four Constituent Changes in KODEX Top 5 Plus ETF Rebalancing in June

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>
<a href="https://www.smartkarma.com/entities/ecopro-co-ltd" target="_blank" data-smartkarma-citation="entities:19029:1" rel="noopener">Ecopro (086520 KS)</a> is up an eye-watering 590% in the past three months, primarily on <a href="https://www.smartkarma.com/entities/ecopro-bm-co-ltd" target="_blank" data-smartkarma-citation="entities:27873:1" rel="noopener">Ecopro BM (247540 KS)</a>'s outperformance, together with sentiment towards soon-to-be-listed 52.8% held Ecopro Materials. </li>
<li>Preceding my comments on Ecopro are the weekly setup/unwind tables for Asia-Pacific Holdcos.</li>
<li>These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation &gt;20%.</li>
</ul>



Ecopro (086520 KS) is up an eye-watering 590% in the past three months, primarily on Ecopro BM (247540 KS)'s outperformance, together with sentiment towards soon-to-be-listed 52.8% held Ecopro Materials. 
Preceding my comments on Ecopro are the weekly setup/unwind tables for Asia-Pacific Holdcos.
These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation &gt;20%.


Global Healthcare Analyst

Tina Banerjee

Equity Bottom-Up

Shinpoong Pharmaceutical / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/shinpoong-pharmaceutical-co-ltd" target="_blank" data-smartkarma-citation="entities:7296:1" rel="noopener">Shinpoong Pharmaceutical (019170 KS)</a> recorded operating loss of KRW34 billion in 2022 from operating loss of KRW14 billion in 2021 and an operating profit of KRW8 billion in 2020.</li>
<li>Shinpoong is investing heavily on R&amp;D, which is taking a toll on its financial health. During 2022, R&amp;D expenses accounted for 21% of total revenue, up from 16% in 2021.</li>
<li>The company is revising phase 3 trial plan for anti-malarial drug Pyramax as COVID-19 treatment. Even if Pyramax succeeds to get approval, the drug is expected to have limited uptake.</li>
</ul>



Shinpoong Pharmaceutical (019170 KS) recorded operating loss of KRW34 billion in 2022 from operating loss of KRW14 billion in 2021 and an operating profit of KRW8 billion in 2020.
Shinpoong is investing heavily on R&amp;D, which is taking a toll on its financial health. During 2022, R&amp;D expenses accounted for 21% of total revenue, up from 16% in 2021.
The company is revising phase 3 trial plan for anti-malarial drug Pyramax as COVID-19 treatment. Even if Pyramax succeeds to get approval, the drug is expected to have limited uptake.


Shinpoong Pharmaceutical (019170 KS): Widening Operating Loss; COVID Drug Loses Steam

Equity Long-Short Analyst

Pyari Menon

Thematic (Sector/Industry)

<ul>
<li>The three companies we write about this week are <a href="https://www.smartkarma.com/entities/tata-consultancy-svcs-ltd" target="_blank" data-smartkarma-citation="entities:18708:1" rel="noopener">Tata Consultancy Svcs (TCS IN)</a> , <a href="https://www.smartkarma.com/entities/lg-chem-ltd" target="_blank" data-smartkarma-citation="entities:3583:1" rel="noopener">LG Chem Ltd (051910 KS)</a> and <a href="https://www.smartkarma.com/entities/cj-cheiljedang-corp" target="_blank" data-smartkarma-citation="entities:1970:1" rel="noopener">CJ Cheiljedang (097950 KS)</a>   </li>
<li>For the nineteen weeks since inception ended 31 March the combined innovation portfolio was +2.4%, versus DJIA -1.4%, S&amp;P500 +3.6%, Nasdaq +9.7%, Russell2000 -2.6%, MSCI-ACWI-ETF +4.9%, all in US$ terms</li>
<li>For the nineteen since inception ended 31 March the small cap portfolio was up 8.0%, the mid cap portfolio was up 3.2% and the large cap portfolio was up 2.1%</li>
</ul>


The three companies we write about this week are Tata Consultancy Svcs (TCS IN) , LG Chem Ltd (051910 KS) and CJ Cheiljedang (097950 KS)   
For the nineteen weeks since inception ended 31 March the combined innovation portfolio was +2.4%, versus DJIA -1.4%, S&amp;P500 +3.6%, Nasdaq +9.7%, Russell2000 -2.6%, MSCI-ACWI-ETF +4.9%, all in US$ terms
For the nineteen since inception ended 31 March the small cap portfolio was up 8.0%, the mid cap portfolio was up 3.2% and the large cap portfolio was up 2.1%


The Innovations Portfolios - Week Nineteen

Global Emerging Market Equities, Propitious Research

Wium Malan, CFA

Global Emerging Market Equities

Independent, Fundamental Quantitative Research

Propitious Research

Fully independent, fundamental and quantitative equity research, focused on companies in the Telecommunication, Media, Technology, Internet and Healthcare sectors in the Global Emerging Markets. Idea generation focused on Quality stocks, trading below their intrinsic Value, with sound Corporate Governance.

Quantitative Analysis

<ul>
<li>The 200 largest weighted companies in the GEM index reported average EPS growth of +14.2%y/y for 4Q22-to-date, slightly down from the +15.7% reported for 3Q22.</li>
<li>Only 54% of companies delivered positive sales surprises, and only 49% delivered positive EPS surprises, significantly down from the trend seen over the past 2 years.</li>
<li>Historically, there has been a significant difference in relative share price performance between the largest positive versus negative surprise generators, for 3 months after the reporting date.</li>
</ul>


The 200 largest weighted companies in the GEM index reported average EPS growth of +14.2%y/y for 4Q22-to-date, slightly down from the +15.7% reported for 3Q22.
Only 54% of companies delivered positive sales surprises, and only 49% delivered positive EPS surprises, significantly down from the trend seen over the past 2 years.
Historically, there has been a significant difference in relative share price performance between the largest positive versus negative surprise generators, for 3 months after the reporting date.


Global Emerging Markets: Reporting Season Summary, 4Q2022

South Korea

LG Chem Ltd. is a chemical manufacturer.  The Company's products include petrochemicals, plastic resins, and engineering plastics.  LG Chem also produces industrial and electronic materials.

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LG Chem Ltd (051910 KS)

Price/Flow Impact on Four Constituent Changes in KODEX Top 5 Plus ETF Rebalancing in June

This post presents a Long Short basket trade idea on the four potential constituent changes in the KODEX Top 5 Plus TR ETF rebalancing in June.

Sanghyun Park

StubWorld: Ecopro's Spike Makes No Sense

The current share price gain in Ecopro appears unsustainable. I would look to unwind the stub - short Ecopro Co and long Ecopro BM - once the...

David Blennerhassett

Shinpoong Pharmaceutical (019170 KS): Widening Operating Loss; COVID Drug Loses Steam

Shinpoong’s operating loss widened to KRW34B in 2022 from KRW14B in 2021. The company is developing oral drug for COVID. As pandemic has subsided,...

Tina Banerjee

The Innovations Portfolios - Week Nineteen

For the nineteen since inception ended 31 March the innovation small cap portfolio was up 8.0%, the innovation mid cap portfolio was up 3.2% and...

Pyari Menon

Global Emerging Markets: Reporting Season Summary, 4Q2022

In this quarterly insight, we analyse recent GEM reporting trends with reference to Sales and EPS growth, size and percentage of positive...

Wium Malan, CFA

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