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 can check this on KIND, KRX's disclosure site. As an example, SK Inc. disclosed this information on July 26, two weeks before the dividend record date, August 10.</li>
<li>We can capture this information in English without the need for Korean. The disclosure title we must hunt is "Decision on Closure of Shareholder's Registry (including Record Date) for Dividends."</li>
<li>The critical aspect here is that we need to identify disclosures from companies that still use the year's last trading day as the dividend base date.</li>
</ul>


We can check this on KIND, KRX's disclosure site. As an example, SK Inc. disclosed this information on July 26, two weeks before the dividend record date, August 10.
We can capture this information in English without the need for Korean. The disclosure title we must hunt is "Decision on Closure of Shareholder's Registry (including Record Date) for Dividends."
The critical aspect here is that we need to identify disclosures from companies that still use the year's last trading day as the dividend base date.


Step-By-Step Guide to Spot Companies Postponing Dividend Base Date to April in Korea

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Thematic (Sector/Industry)

<ul>
<li>We believe that the nine Korean banks (on average) are likely to continue to underperform KOSPI in the next 6-12 months due to the continued rising delinquencies.</li>
<li>The major reasons for higher loans and cards delinquency ratios include higher interest rate burdens, higher inflation rates, inverted yield curve, weakening economy, and pressures on disposable income.</li>
<li>The delinquency ratios of the largest nine banks in Korea all worsened in 1Q 2023 (for both banks and credit cards).</li>
</ul>


We believe that the nine Korean banks (on average) are likely to continue to underperform KOSPI in the next 6-12 months due to the continued rising delinquencies.
The major reasons for higher loans and cards delinquency ratios include higher interest rate burdens, higher inflation rates, inverted yield curve, weakening economy, and pressures on disposable income.
The delinquency ratios of the largest nine banks in Korea all worsened in 1Q 2023 (for both banks and credit cards).


Korean Banks: Sharp Rise in Delinquency Ratios in 1Q 2023 & Inverted Yield Curve

<ul>
<li>DGB Financial Group's market cap makes it virtually impossible to get deleted even with Kakao Pay's GICS change in this June rebalancing.</li>
<li>It's unclear whether this has damaged the price impact of K200 inclusion. Nevertheless, the intensity of the pre-rebalancing flow wasn't aggressive, possibly due to the combination of factors, including this.</li>
<li>This suggests the possibility of an intense price impact resulting from a more concentrated flow right before the effective date, so we should prepare a setup that considers this.</li>
</ul>


DGB Financial Group's market cap makes it virtually impossible to get deleted even with Kakao Pay's GICS change in this June rebalancing.
It's unclear whether this has damaged the price impact of K200 inclusion. Nevertheless, the intensity of the pre-rebalancing flow wasn't aggressive, possibly due to the combination of factors, including this.
This suggests the possibility of an intense price impact resulting from a more concentrated flow right before the effective date, so we should prepare a setup that considers this.


Clarifying Market's Inaccurate Constituent Change Forecast in K200 Rebalancing with GICS Revision

<ul>
<li>In this insight, we discuss the potential new inclusions in KOSPI 200 rebalance in May 2023.</li>
<li>The five stocks that are potential inclusions in KOSPI 200 rebalance in May 2023 include Kumyang, Cosmo Chemical, Dentium, Jeju Air, and Youlchon Chemical. </li>
<li>Kumyang and Cosmo Chemical are up on average 177% YTD. We would not chase these two stocks as their share prices have already risen considerably. </li>
</ul>


In this insight, we discuss the potential new inclusions in KOSPI 200 rebalance in May 2023.
The five stocks that are potential inclusions in KOSPI 200 rebalance in May 2023 include Kumyang, Cosmo Chemical, Dentium, Jeju Air, and Youlchon Chemical. 
Kumyang and Cosmo Chemical are up on average 177% YTD. We would not chase these two stocks as their share prices have already risen considerably. 


Additional Potential Inclusions in KOSPI 200 Rebalance in May 2023

<ul>
<li>The Korea Exchange announced special changes in KOSPI 200 index.</li>
<li>Effective 3 April, <a href="https://www.smartkarma.com/entities/meritz-securities-co-ltd" target="_blank" data-smartkarma-citation="entities:19692:1" rel="noopener">Meritz Securities (008560 KS)</a> will be excluded from the KOSPI 200 index and <a href="https://www.smartkarma.com/entities/dgb-financial-group-inc" target="_blank" data-smartkarma-citation="entities:6138:1" rel="noopener">DGB Financial Group (139130 KS)</a> will replace it. </li>
<li>We think that there could be slightly better capital flow into DGB Financial as compared to other regional/smaller banks in Korea including BNK Financial</li>
</ul>


The Korea Exchange announced special changes in KOSPI 200 index.
Effective 3 April, Meritz Securities (008560 KS) will be excluded from the KOSPI 200 index and DGB Financial Group (139130 KS) will replace it. 
We think that there could be slightly better capital flow into DGB Financial as compared to other regional/smaller banks in Korea including BNK Financial


KOSPI 200: Special Changes & Rising Delinquency Ratios of Banks in Korea

South Korea

DGB Financial Group Inc., a financial holding company, provides a full range of consumer and commercial banking-related financial services.  The Company operates and controls its financial subsidiaries such as Daegu Bank, Daegu Credit Information, and DBG Capital.

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DGB Financial Group (139130 KS)

Step-By-Step Guide to Spot Companies Postponing Dividend Base Date to April in Korea

This post provides a step-by-step guide to spot which companies will effectively postpone the dividend base date to next April in Korea.

Sanghyun Park

Korean Banks: Sharp Rise in Delinquency Ratios in 1Q 2023 & Inverted Yield Curve

We believe that the nine Korean banks (on average) are likely to continue to underperform KOSPI in the next 6-12 months due to the continued rising...

Douglas Kim

Clarifying Market's Inaccurate Constituent Change Forecast in K200 Rebalancing with GICS Revision

This post clarifies the market's inaccurate constituent change forecast on the upcoming KOSPI 200 rebalancing in June with the GICS revision,...

Sanghyun Park

Additional Potential Inclusions in KOSPI 200 Rebalance in May 2023

The five stocks that are potential inclusions in KOSPI 200 rebalance in May 2023 include Kumyang, Cosmo Chemical, Dentium, Jeju Air, and Youlchon...

Douglas Kim

KOSPI 200: Special Changes & Rising Delinquency Ratios of Banks in Korea

Korea Exchange announced special changes in KOSPI 200. Effective 3 April, Meritz Securities will be excluded from the KOSPI 200 index and DGB...

Douglas Kim

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