Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

<ul>
<li>In this insight, we highlight the pricing gap divergences of the major Korean holdcos and opcos in 3Q 2023.</li>
<li>Of the 38 pair trades, 22 of them involved holdcos outperforming opcos YTD and 16 of them involved opcos outperforming holdcos in the same period.</li>
<li>We highlight 38 pair trades that involve Korean holdcos and opcos.</li>
</ul>


In this insight, we highlight the pricing gap divergences of the major Korean holdcos and opcos in 3Q 2023.
Of the 38 pair trades, 22 of them involved holdcos outperforming opcos YTD and 16 of them involved opcos outperforming holdcos in the same period.
We highlight 38 pair trades that involve Korean holdcos and opcos.


Korean Holdcos Vs Opcos Gap Trading Opportunities in 3Q 2023

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>The trigger for yesterday's sell-off was the sudden collective decision of the brokerages that had been allowing credit trading for these stocks to halt credit trading simultaneously.</li>
<li>There is a possibility that the identities of the stocks under investigation were leaked, and these brokerages took preemptive actions.</li>
<li>There have also been observations of large-cap stocks that may become the next targets. Some notable examples include Cosmo Chemical, Kum Yang, Posco International, and Ecopro Co.</li>
</ul>


The trigger for yesterday's sell-off was the sudden collective decision of the brokerages that had been allowing credit trading for these stocks to halt credit trading simultaneously.
There is a possibility that the identities of the stocks under investigation were leaked, and these brokerages took preemptive actions.
There have also been observations of large-cap stocks that may become the next targets. Some notable examples include Cosmo Chemical, Kum Yang, Posco International, and Ecopro Co.


Market Talk on the Five Stocks Hitting the Lower Limit Yesterday

<ul>
<li>Lutronic Corp and Jeisys Medical have considerably lower DTV in comparison to their float shares. It is highly probable that they have artificially increased their float shares.</li>
<li>Coincidentally, these two stocks are the ones that have experienced the most dramatic increase in borrow balance after the result announcement.</li>
<li>These two stocks are being targeted for short-selling from a post-event perspective because the market believes they will exhibit abnormal passive (price) impact due to their inflated float shares.</li>
</ul>


Lutronic Corp and Jeisys Medical have considerably lower DTV in comparison to their float shares. It is highly probable that they have artificially increased their float shares.
Coincidentally, these two stocks are the ones that have experienced the most dramatic increase in borrow balance after the result announcement.
These two stocks are being targeted for short-selling from a post-event perspective because the market believes they will exhibit abnormal passive (price) impact due to their inflated float shares.


Two of KS200/KQ150 Additions Are Prime-Targeted for Shorting Due to Their Inflated Float Shares

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

<ul>
<li>There will be 2 additions and 2 deletions for the <a href="https://www.smartkarma.com/entities/korea-stock-exchange-kospi-200-index" target="_blank" data-smartkarma-citation="entities:26021:1" rel="noopener">Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX)</a> at the June rebalance that will be implemented on 8 June.</li>
<li>
<a href="https://www.smartkarma.com/entities/kum-yang-co-ltd" target="_blank" data-smartkarma-citation="entities:10364:1" rel="noopener">Kum Yang (001570 KS)</a> and <a href="https://www.smartkarma.com/entities/cosmochemical-co-ltd" target="_blank" data-smartkarma-citation="entities:3747:1" rel="noopener">Cosmochemical (005420 KS)</a>, both high probability names, are inclusions while <a href="https://www.smartkarma.com/entities/hwaseung-enterprise-co-ltd" target="_blank" data-smartkarma-citation="entities:35611:1" rel="noopener">Hwaseung Enterprise (241590 KS)</a> and <a href="https://www.smartkarma.com/entities/dongwon-industries-co-ltd" target="_blank" data-smartkarma-citation="entities:1783:1" rel="noopener">Dongwon Industries (006040 KS)</a> are deletions.</li>
<li>Not surpisingly, there is almost no short interest on the adds. Short interest on the deletes is higher and rising. Expect short covering on the deletes prior to implementation.</li>
</ul>


There will be 2 additions and 2 deletions for the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) at the June rebalance that will be implemented on 8 June.

Kum Yang (001570 KS) and Cosmochemical (005420 KS), both high probability names, are inclusions while Hwaseung Enterprise (241590 KS) and Dongwon Industries (006040 KS) are deletions.
Not surpisingly, there is almost no short interest on the adds. Short interest on the deletes is higher and rising. Expect short covering on the deletes prior to implementation.


KOSPI200 Index Rebalance: Two Sets of Changes

<ul>
<li>Korea Exchange announced the KOSPI 200 and KOSDAQ 150 indices constituents changes today. </li>
<li>Kum Yang (001570 KS) and Cosmochemical (005420 KS) were included in the KOSPI 200. Dongwon Industries (006040 KS) and Hwaseung Enterprise (241590 KS) were excluded in KOSPI 200 index.</li>
<li>We expect continued underperformance of Kumyang and Cosmo Chemical as many investors will now start to sell these stocks based on <em>"buy on rumor, sell on news"</em> strategy.</li>
</ul>


Korea Exchange announced the KOSPI 200 and KOSDAQ 150 indices constituents changes today. 
Kum Yang (001570 KS) and Cosmochemical (005420 KS) were included in the KOSPI 200. Dongwon Industries (006040 KS) and Hwaseung Enterprise (241590 KS) were excluded in KOSPI 200 index.
We expect continued underperformance of Kumyang and Cosmo Chemical as many investors will now start to sell these stocks based on "buy on rumor, sell on news" strategy.


Trading Strategy Post KRX Rebalance Announcement of KOSPI 200 and KOSDAQ 150

South Korea

Cosmochemical Co., Ltd. manufactures and markets titanium dioxide used in synthetic resins, rubber, paper, paint, and TV cathode-ray tubes.  The Company also produces titanium dioxide byproducts, ferrous sulfate, koferis, ferosol for wastewater treatment agent uses, and sports equipment.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Cosmochemical (005420 KS)

Korean Holdcos Vs Opcos Gap Trading Opportunities in 3Q 2023

In this insight, we highlight the pricing gap divergences of the major Korean holdcos and opcos in 3Q 2023. We highlight 38 pair trades that...

Douglas Kim

Market Talk on the Five Stocks Hitting the Lower Limit Yesterday

This post examines the major issues that have garnered significant attention based on the information available so far regarding the incident of...

Sanghyun Park

Two of KS200/KQ150 Additions Are Prime-Targeted for Shorting Due to Their Inflated Float Shares

This post investigates which of the KOSPI 200/KOSDAQ 150 additions are being prime-targeted for short-selling after index inclusion due to the...

Sanghyun Park

KOSPI200 Index Rebalance: Two Sets of Changes

Kumyang & CosmoChem will be added to the KOSPI200 in June. Both stocks ran up a lot and are now correcting - they become short sell eligible from...

Brian Freitas

Trading Strategy Post KRX Rebalance Announcement of KOSPI 200 and KOSDAQ 150

Korea Exchange announced the KOSPI 200 and KOSDAQ 150 indices constituents changes today. We expect continued underperformance of Kumyang and Cosmo...

Douglas Kim

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)