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>At last Friday's close, the Amorepacific Group (002790 KS) stub deserves our attention as it is in a diversion at a -1.58σ on a 20D moving average.</li>
<li>Recent valuation trends and institutional flows also do not show anything unusual. So the current diversion between them should be seen as a temporary distortion.</li>
<li>Amorepacific reacts more sensitively than AmoreG in the event of a lower-than-expected result on the 2Q earnings release. So now may be the right entry time to target reversion trading.</li>
</ul>


At last Friday's close, the Amorepacific Group (002790 KS) stub deserves our attention as it is in a diversion at a -1.58σ on a 20D moving average.
Recent valuation trends and institutional flows also do not show anything unusual. So the current diversion between them should be seen as a temporary distortion.
Amorepacific reacts more sensitively than AmoreG in the event of a lower-than-expected result on the 2Q earnings release. So now may be the right entry time to target reversion trading.


Amorepacific Stub: Reversion Trading on Current Diversion Ahead of 2Q Earnings Release

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Cross Asset Strategy

<ul>
<li>We discuss two positive factors pushing greater demand for Korean preference stocks (value &amp; new government) offset by one major negative factor (market liquidity) this year. </li>
<li>The 28 common shares are on average down 17% YTD versus their preference counterparts which are down on average 17.3% YTD.</li>
<li>The sharp increases in common vs preference shares on Amorepacific Corp, Hotel Shilla, and LG H&amp;H last month may be a bit excessive and the gaps are likely to narrow.  </li>
</ul>


We discuss two positive factors pushing greater demand for Korean preference stocks (value &amp; new government) offset by one major negative factor (market liquidity) this year. 
The 28 common shares are on average down 17% YTD versus their preference counterparts which are down on average 17.3% YTD.
The sharp increases in common vs preference shares on Amorepacific Corp, Hotel Shilla, and LG H&amp;H last month may be a bit excessive and the gaps are likely to narrow.  


Korean Prefs Vs Common: Closing the Gaps on Select Stocks

Equity Bottom-Up

<ul>
<li>There were 128k visitors to South Korea in April, up 32% MoM which was the biggest jump in MoM change in visitors to South Korea in the past year.</li>
<li>There were 215k outbound people from South Korea in April 2022, up 48% MoM and up 202% YoY.</li>
<li>Among the 21 major reopening plays in Korea, we prefer certain sectors including casino related plays (GKL, Paradise, and Kangwon Land) as well as F&amp;B related (Hitejinro and CJ Cheiljedang).</li>
</ul>


There were 128k visitors to South Korea in April, up 32% MoM which was the biggest jump in MoM change in visitors to South Korea in the past year.
There were 215k outbound people from South Korea in April 2022, up 48% MoM and up 202% YoY.
Among the 21 major reopening plays in Korea, we prefer certain sectors including casino related plays (GKL, Paradise, and Kangwon Land) as well as F&amp;B related (Hitejinro and CJ Cheiljedang).


Significant MoM Increase in Inbound & Outbound Visitors in Korea in April 2022

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Quantitative Analysis

<ul>
<li>We look at short interest across Hong Kong, Japan, Korea and Taiwan in April to identify stocks/sectors that have seen the largest changes in each market.</li>
<li>Korea and Taiwan are showing a clear divergence with short notional increasing as the market moves lower, indicative of new shorts being initiated.</li>
<li>
<a href="https://www.smartkarma.com/entities/china-merchants-bank-co-ltd-3388a037-4214-4997-b45d-520518cfdb57" target="_blank" data-smartkarma-citation="entities:10987:1" rel="noopener">China Merchants Bank H (3968 HK)</a> has seen the largest short covering as the stock has tumbled in the last couple of weeks.</li>
</ul>


We look at short interest across Hong Kong, Japan, Korea and Taiwan in April to identify stocks/sectors that have seen the largest changes in each market.
Korea and Taiwan are showing a clear divergence with short notional increasing as the market moves lower, indicative of new shorts being initiated.

China Merchants Bank H (3968 HK) has seen the largest short covering as the stock has tumbled in the last couple of weeks.


Asia Short Interest: Large Moves in April

<ul>
<li>On 19 April, the US CDC stated that the national mask requirement on public transportation is no longer in effect in the United States.</li>
<li><strong>The CDC lifting the mask mandate is a key catalyst and other major countries are likely to follow the US in the coming months. </strong></li>
<li><em>Will the world likely to become more like Shanghai and enforce even greater lockdown policies or will they become more like the US and drop social distancing and mask mandates?  </em></li>
</ul>


On 19 April, the US CDC stated that the national mask requirement on public transportation is no longer in effect in the United States.
The CDC lifting the mask mandate is a key catalyst and other major countries are likely to follow the US in the coming months. 
Will the world likely to become more like Shanghai and enforce even greater lockdown policies or will they become more like the US and drop social distancing and mask mandates?  


CDC Ends Public Transportation Mask Mandate & Will the World Follow Shanghai or Vice Versa?

South Korea

LG H&H Co., Ltd. manufactures and distributes cosmetics. The Company produces whoo, o hui, sum 37, basic cosmetics, color cosmetics, and other related products. LG H&H also produces toothpaste, soap, detergents, healthy, personal care, and refreshing products.

AMOREPACIFIC Group is an investment holding company. The Company, through its subsidiaries, produce cosmetics and toiletries.

Cosmax, Inc. is a cosmetics manufacturer. The Company develops and produces a variety of cosmetics for men and women, such as basic and special skin care, makeup, hair care, and other beauty products. Cosmax manufactures its products on original equipment manufacturing (OEM) basis.

Kolmar Korea Co., Ltd. manufactures and distributes personal care products. The Company produces cosmetics. Kolmar Korea also produces medicine and healthcare products.

Cosmecca Korea Co., Ltd. develops and manufactures cosmetics. The Company specializes in research and development of cosmetics. Cosmecca Korea serves customers in Korea.

Kolmar Korea Holdings Co.,Ltd operates as a holding company. The Company through its subsidiaries, provide cosmetics manufacturing, health food manufacturing, pharmaceuticals development, and other services. Kolmar Korea Holdings offers services in Korea.

Hankook Cosmetics Manufacturing Co Ltd manufactures and sells a variety of cosmetics and toiletries, such as makeup, skin care, body care, and hair care products for menand women.  The Company markets its products under the brand names Calli, Idem, Elesis, Ossion, and Pamess.

Hankook Cosmetics Manufacturing (003350 KS)

NeoPharm Co., Ltd. develops and manufactures skin care goods for dried skin and atopic dermatitis.  The Company's main products include skin cleaning cream, body lotion, and skin care cosmetics.

Able C&C Co., Ltd. develops and manufactures cosmetic products. The Company's products include makeup, skin care, and hair care, and body care.

It's Hanbul Co., Ltd. manufactures and markets personal care items. The Company produces cosmetics, make-up tools, hair & body products, and skin care products.

Colgate-Palmolive (India) Ltd. manufactures consumer products in the oral care and body care area. The Company's products include soaps, cosmetics, toilet preparations, toothpaste, toothbrushes, shaving brushes, and glycerin.

Coty Inc. manufactures and distributes beauty products. The Company offers fragrances, color cosmetics, hygiene, sun care, and skin treatment products. Coty supplies its products to department stores, specialty retailers, mass-market retailers, and duty free shops in airports worldwide.

Marico Limited manufactures consumer products and services in the beauty and wellness space. The Company is known for its presence in the following categories: Coconut Oil, Hair Oils, Anti-lice Treatment, Premium Refined Edible Oils and Fabric Care. Marico Limited is present in the Skin Care Services segment through Kaya Skin Clinics.

Procter & Gamble Hygiene and Healthcare Limited manufactures personal & beauty care and healthcare products. The Company's products include menthol, dementholised peppermint oil, cosmetics, personal care products, toilet preparations, soaps and detergents.

Procter & Gamble Hygiene and Healthcare (PG IN)

e.l.f. Beauty, Inc. operates as a cosmetic company. The Company offers beauty products for eyes, lips, and face. e.l.f. Beauty provides eyeliners, lipsticks, lip care and brushes, powder, and skin care products.

Hengan International Group Company Limited, through its subsidiaries, manufactures and sells personal hygiene products such as sanitary napkins and disposable baby diapers in China.  The Company's products are sold under the Anerle brand name.

Emami Limited develops and distributes personal, beauty, and healthcare products in India and other countries.  The Company manufactures herbal and Ayurvedic products, including antiseptic cream, prickly heat powder, pain balm, and cool oil.

Shiseido Company, Limited manufactures cosmetic and toiletry products. The Company offers an array of makeup and skin-care products, toiletries, beauty salon, pharmaceuticals, foodstuffs, and fine chemicals.

Inter Parfums, Inc. manufactures, markets, and distributes a wide array of fragrances and fragrance related products. The Company's European-based operations produce and distribute prestige fragrance products primarily under license with brand owners. It's U.S.-based operations primarily produce and sell fragrance and personal care products under several specialty retail brands.

KOSE Corporation manufactures, retails, and exports cosmetics including make up, skin care, and hair care products.  The Company sells its products in Hong Kong, China, Singapore, and Malaysia.

Amorepacific Corporation develops, manufactures, and exports skin care, make-up, and fragrance products. The Company also produces and markets personal care and health-related products, such as shampoos, soaps, toothpastes, and health teas.

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Amorepacific Corp (090430 KS)

Amorepacific Stub: Reversion Trading on Current Diversion Ahead of 2Q Earnings Release

This post examines the current price diversion of the Amorepacific stub and discusses the entry timing for reversion trading ahead of the 2Q...

Sanghyun Park

Korean Prefs Vs Common: Closing the Gaps on Select Stocks

We discuss two positive factors pushing greater demand for Korean preference stocks (value & new government) offset by one major negative factor...

Douglas Kim

Significant MoM Increase in Inbound & Outbound Visitors in Korea in April 2022

There were 128k visitors to South Korea in April, up 32% MoM. There were 215k outbound people from South Korea in April 2022, up 48% MoM.

Douglas Kim

Asia Short Interest: Large Moves in April

Short notional in Korea and Taiwan has been increasing as the market has been moving lower. Shorts on China Merchant Bank have been covered in...

Brian Freitas

CDC Ends Public Transportation Mask Mandate & Will the World Follow Shanghai or Vice Versa?

The CDC lifting the mask mandate is a key catalyst and other major countries are likely to follow the US in the coming months.

Douglas Kim

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