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>Among the local theme ETFs in Korea, the TIGER (FnGuide) Top 10 has the highest win rate on rebalancing flow trade.</li>
<li>LG Energy deserves the most attention at the next rebalancing event. If LG Chem disposes of some of its LG Energy shares, LG Energy can bypass those on the borderline.</li>
<li>In this case, Shinhan, the one on the borderline at this point, will face a passive flow of -0.65x ADTV, while LG Energy will receive +0.25x.</li>
</ul>


Among the local theme ETFs in Korea, the TIGER (FnGuide) Top 10 has the highest win rate on rebalancing flow trade.
LG Energy deserves the most attention at the next rebalancing event. If LG Chem disposes of some of its LG Energy shares, LG Energy can bypass those on the borderline.
In this case, Shinhan, the one on the borderline at this point, will face a passive flow of -0.65x ADTV, while LG Energy will receive +0.25x.


FnGuide Top 10 (TIGER ETF) Rebalancing Review & Preview: LG Energy's Potential Inclusion

<ul>
<li>With the screening period over (May 3-31), Shinhan IN/Celltrion OUT is virtually a foregone conclusion.</li>
<li>We should consider an individually-hedged approach, instead of a plain long/short, with a tightly moving-together peer, preferably on a single-day trading window.</li>
<li>I suggest using KB Financial and Celltrion Healthcare as hedges of LONG &amp; SHORT for Shinhan and Celltrion, respectively.</li>
</ul>


With the screening period over (May 3-31), Shinhan IN/Celltrion OUT is virtually a foregone conclusion.
We should consider an individually-hedged approach, instead of a plain long/short, with a tightly moving-together peer, preferably on a single-day trading window.
I suggest using KB Financial and Celltrion Healthcare as hedges of LONG &amp; SHORT for Shinhan and Celltrion, respectively.


FnGuide Top 10 Rebalancing: How We Trade Shinhan IN/Celltrion OUT

Global Healthcare Analyst

Tina Banerjee

Thematic (Sector/Industry)

<ul>
<li>With the declining number of daily new infections, most countries in APAC region are in process to relax their COVID-related restrictions and border re-opening.</li>
<li>While hospitals are the prime beneficiaries of re-opening, medical devices companies will also benefit from the resumption of elective surgeries. Monkeypox is not expected to have big adverse effect.</li>
<li>Investment thesis for four top picks in APAC healthcare sector remains intact, and their recent quarterly results depict their continued growth momentum.</li>
</ul>


With the declining number of daily new infections, most countries in APAC region are in process to relax their COVID-related restrictions and border re-opening.
While hospitals are the prime beneficiaries of re-opening, medical devices companies will also benefit from the resumption of elective surgeries. Monkeypox is not expected to have big adverse effect.
Investment thesis for four top picks in APAC healthcare sector remains intact, and their recent quarterly results depict their continued growth momentum.


APAC Healthcare – Good Bet on Re-Opening; Continued Strong Recovery in Top Picks

<ul>
<li>Celltrion Inc (068270 KS)'s deletion seems pretty much a foregone conclusion as its average float-adjusted market cap on May 3-19 is way below the next one in line.</li>
<li>Shinhan Financial (055550 KS) is the one to replace Celltrion based on the numbers so far. There is close to a ₩1T gap with the next one, POSCO (005490 KS).</li>
<li>In this rebalancing, the flow impact of the addition/deletion is even more significant. So, their share price fluctuations on June 10 will likely be more substantial than last time.</li>
</ul>


Celltrion Inc (068270 KS)'s deletion seems pretty much a foregone conclusion as its average float-adjusted market cap on May 3-19 is way below the next one in line.
Shinhan Financial (055550 KS) is the one to replace Celltrion based on the numbers so far. There is close to a ₩1T gap with the next one, POSCO (005490 KS).
In this rebalancing, the flow impact of the addition/deletion is even more significant. So, their share price fluctuations on June 10 will likely be more substantial than last time.


FnGuide Top 10 Rebalancing on June 10: More Substantial Flow Impact than Last Time

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/celltrion-inc" target="_blank" data-smartkarma-citation="entities:991:1" rel="noopener">Celltrion Inc (068270 KS)</a> reported muted Q1 results, with revenue, operating profit, and net profit declining quarter-over-quarter. Its biosimilar products in the EU are facing price competition.</li>
<li>Celltrion has recalled its COVID-19 rapid antigen test kits in the U.S. in April, which marks its third such recall in less than two months.</li>
<li>Celltrion shares plunged 15% since I published bearish insight on the company on March 8. Bear thesis of biosimilar competition still holds good for the company.</li>
</ul>



Celltrion Inc (068270 KS) reported muted Q1 results, with revenue, operating profit, and net profit declining quarter-over-quarter. Its biosimilar products in the EU are facing price competition.
Celltrion has recalled its COVID-19 rapid antigen test kits in the U.S. in April, which marks its third such recall in less than two months.
Celltrion shares plunged 15% since I published bearish insight on the company on March 8. Bear thesis of biosimilar competition still holds good for the company.


Celltrion (068270 KS): Muted Q1 2022 Performance Reflects Continuing Biosimilars Pricing Pressure

South Korea

Celltrion Inc. produces and sells biosimilar products and also provides consignm ent processing service for other companies.  The Company's main product is Abata cept which is for arthritis treatment

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Celltrion Inc (068270 KS)

FnGuide Top 10 (TIGER ETF) Rebalancing Review & Preview: LG Energy's Potential Inclusion

This post reviews the trading pattern seen in the last rebalancing of the FnGuide Top 10 Index (TIGER ETF) and previews the rebalancing flow...

Sanghyun Park

FnGuide Top 10 Rebalancing: How We Trade Shinhan IN/Celltrion OUT

This post looks at the FnGuide Top 10 Index (TIGER ETF) rebalancing results as we are past the screening period and suggests a trading approach on...

Sanghyun Park

APAC Healthcare – Good Bet on Re-Opening; Continued Strong Recovery in Top Picks

Amid the declining new COVID infections and economy re-opening, top picks in APAC healthcare sector are poised to benefit. Their recent quarterly...

Tina Banerjee

FnGuide Top 10 Rebalancing on June 10: More Substantial Flow Impact than Last Time

This post looks at the current status of the FnGuide Top 10 Index rebalancing as we are halfway through the completion of the review period.

Sanghyun Park

Celltrion (068270 KS): Muted Q1 2022 Performance Reflects Continuing Biosimilars Pricing Pressure

Celltrion reported weak Q1 results, with its operating and net profit declining y/y as well as q/q. Biosimilar selling price continues to erode due...

Tina Banerjee

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