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>We'd better pay attention to trading for price gain by building a position 2-3 weeks towards ex-dividend and getting out of it before ex-dividend, which often provides higher returns.</li>
<li>For this, we should focus on high dividend yield stocks, which also feature a high borrow rate, but on a decreasing trend.</li>
<li>They are <strong><a href="https://www.smartkarma.com/entities/hyosung-tnc-co-ltd" target="_blank" data-smartkarma-citation="entities:27749:1" rel="noopener">Hyosung TNC (298020)</a></strong>, <strong><a href="https://www.smartkarma.com/entities/hd-hyundai" target="_blank" data-smartkarma-citation="entities:24075:1" rel="noopener">HD Hyundai (267250)</a></strong>, <strong><a href="https://www.smartkarma.com/entities/bnk-financial-group-inc" target="_blank" data-smartkarma-citation="entities:386:1" rel="noopener">BNK Financial (138930)</a></strong>, <strong><a href="https://www.smartkarma.com/entities/woori-financial-group-inc" target="_blank" data-smartkarma-citation="entities:27995:1" rel="noopener">Woori Financial (316140)</a></strong>, <strong><a href="https://www.smartkarma.com/entities/dl-e-c-co-ltd" target="_blank" data-smartkarma-citation="entities:31375:1" rel="noopener">DL E&amp;C (375500)</a></strong>, <strong><a href="https://www.smartkarma.com/entities/lx-semicon-co-ltd" target="_blank" data-smartkarma-citation="entities:20670:1" rel="noopener">LX Semicon (108320)</a></strong>, <strong><a href="https://www.smartkarma.com/entities/kb-financial-group-inc" target="_blank" data-smartkarma-citation="entities:718:1" rel="noopener">KB Financial (105560 KS)</a></strong>, and <strong><a href="https://www.smartkarma.com/entities/hdc-hyundai-development-co-engineering-construction" target="_blank" data-smartkarma-citation="entities:27397:1" rel="noopener">HDC Hyundai Development (294870)</a></strong>.        </li>
</ul>


We'd better pay attention to trading for price gain by building a position 2-3 weeks towards ex-dividend and getting out of it before ex-dividend, which often provides higher returns.
For this, we should focus on high dividend yield stocks, which also feature a high borrow rate, but on a decreasing trend.
They are Hyosung TNC (298020), HD Hyundai (267250), BNK Financial (138930), Woori Financial (316140), DL E&amp;C (375500), LX Semicon (108320), KB Financial (105560 KS), and HDC Hyundai Development (294870).        


Yearend Dividend Play on Korean Stocks with High Yield/Borrow Rate

Financials & FinTech research, Galliano’s Financials Research

Victor Galliano

Financials & FinTech research

Financials & FinTech, EM & Developed Markets

Galliano’s Financials Research

Galliano's Financials Research provides fundamental research in Emerging Markets financials, including FinTech, as well as financials in select Developed Markets.

The investment style applied is generally value oriented, although Growth At Reasonable Price (GARP) strategies can also be used where appropriate. 

Our investment research approach aim is often contrarian, looking to capitalise on overly sceptical or optimistic consensus views. In terms of valuation techniques, the focus is on PBV ratio to ROE, PE multiples and dividend yield, as well as the application of PEG ratios and, where appropriate, Sum of the Parts (SOTP) valuations.

Equity Bottom-Up

<ul>
<li>Six of the seven South Korean banks screen favourably on valuation versus returns metrics to June 2022; we like KB Financial, whilst Woori Financial is a wait and see story</li>
<li>KB has undemanding valuations, and one of the lowest PEG ratios; it delivers steady pre-provision returns, has sound core capital ratio of close to 13% and healthy credit quality ratios</li>
<li>Woori Financial and potentially KakaoBank are two names to review post 3Q22 results, with Woori and KakaoBank having seen their 2Q22 cost of risk rise sharply; we seek positive catalysts</li>
</ul>


Six of the seven South Korean banks screen favourably on valuation versus returns metrics to June 2022; we like KB Financial, whilst Woori Financial is a wait and see story
KB has undemanding valuations, and one of the lowest PEG ratios; it delivers steady pre-provision returns, has sound core capital ratio of close to 13% and healthy credit quality ratios
Woori Financial and potentially KakaoBank are two names to review post 3Q22 results, with Woori and KakaoBank having seen their 2Q22 cost of risk rise sharply; we seek positive catalysts


South Korean Banks Screener; KB Financial Is Our Core Pick

<ul>
<li>The index targets the GICS Financials/Banks sector stocks: 12 stocks belong to this sector. Then nine of these are currently included in the KRX Banks.</li>
<li>Compared to the last rebalancing, where we had Kakao Bank's inclusion event, the impact size for the upcoming rebalancing will likely be significantly reduced.</li>
<li>The last rebalancing showed that the directional correlation between passive flow and price movement was high. So, we can still consider a Long/Short Day Trade even with this impact size.</li>
</ul>


The index targets the GICS Financials/Banks sector stocks: 12 stocks belong to this sector. Then nine of these are currently included in the KRX Banks.
Compared to the last rebalancing, where we had Kakao Bank's inclusion event, the impact size for the upcoming rebalancing will likely be significantly reduced.
The last rebalancing showed that the directional correlation between passive flow and price movement was high. So, we can still consider a Long/Short Day Trade even with this impact size.


KRX Banks Index (KODEX ETF): September Rebalancing Preview

<ul>
<li>Trading for price gain by building a position 2-3 weeks before the dividend record date and selling it before the ex-dividend date provides better performance than directly aiming at dividends.</li>
<li>There are signs that this pattern will repeat itself this year. Already, local financial stocks have outperformed the market this month.</li>
<li>Even from now, we can consider building an outright long position on these dividend stocks in a basket and getting out before (or at) the dividend record date.</li>
</ul>


Trading for price gain by building a position 2-3 weeks before the dividend record date and selling it before the ex-dividend date provides better performance than directly aiming at dividends.
There are signs that this pattern will repeat itself this year. Already, local financial stocks have outperformed the market this month.
Even from now, we can consider building an outright long position on these dividend stocks in a basket and getting out before (or at) the dividend record date.


Korea Dividend Stocks: Yearend Trading Approach

<p>The closing date for the stock market this year is December 30 (Thursday). So, <strong>the ex-dividend date</strong> for the fourth quarter and fiscal year-end (for the December settlement companies) is <strong>December 29</strong> (Wednesday).</p><p>Among local stocks that have consistently paid dividends over the past three years, stocks with a <strong>dividend yield of 4%</strong> or higher at this point based on the FnGuide consensus DPS are as follows. Breaking down by industry, there are many financial and steel/chemical stocks in the list, which, of course, isn't surprising at all.</p><div class="content-highlight"><p>The stocks highlighted in yellow in the list below (POSCO and Shinhan Financial) are stocks that pay quarterly dividends. And the stocks highlighted in red (Hana Financial and KB Financial) pay interim dividends.</p></div><section class="figure"><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/240/690/original/Screen+Shot+2021-11-09+at+9.27.33+AM.png?1636468072" class="editor-image img-responsive" data-smartkarma-image-id="240690"></figure></section></section>

The closing date for the stock market this year is December 30 (Thursday). So, the ex-dividend date for the fourth quarter and fiscal year-end (for the December settlement companies) is December 29 (Wednesday).Among local stocks that have consistently paid dividends over the past three years, stocks with a dividend yield of 4% or higher at this point based on the FnGuide consensus DPS are as follows. Breaking down by industry, there are many financial and steel/chemical stocks in the list, which, of course, isn't surprising at all.The stocks highlighted in yellow in the list below (POSCO and Shinhan Financial) are stocks that pay quarterly dividends. And the stocks highlighted in red (Hana Financial and KB Financial) pay interim dividends.

Korea Dividend Stocks: +4% Yearend Yield & +50% YoY Growth with +₩10B ADTV

South Korea

BNK Financial Group Inc. a holding company, provides a full range of consumer and commercial banking-related financial services. The Company's main businesses include banking, trust banking, and assets management to individuals, businesses, and other financial institutions.

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Bnk Financial Group (138930 KS)

Yearend Dividend Play on Korean Stocks with High Yield/Borrow Rate

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Sanghyun Park

South Korean Banks Screener; KB Financial Is Our Core Pick

Of the seven South Korean banks, we like KB Financial for its attractive valuations, and low PEG ratio; it delivers steady pre-provision returns,...

Victor Galliano

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Korea Dividend Stocks: +4% Yearend Yield & +50% YoY Growth with +₩10B ADTV

This post searches and filters Korea's high dividend stocks meeting the conditions of a +4% yield and a +50% YoY growth with an ADTV of ₩10B based...

Sanghyun Park

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