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

Kepco Engineering & Construction / Event-Driven

<ul>
<li>Since KEPCO announced the sale of its stake in KEPCO E&amp;C, this will happen. But the question is when, and the market was betting that it would not happen immediately.</li>
<li>But these bets collapsed yesterday. It is because Choo Kyung-ho, Deputy Prime Minister of Economy, publicly made remarks yesterday that seemed to pressure KEPCO to make additional self-rescue efforts.</li>
<li>KEPCO may aim at the level of ₩60,000 by applying a 5-7% discount rate from the mid-₩60,000 price. With this price in mind, we need to time this block deal.</li>
</ul>


Since KEPCO announced the sale of its stake in KEPCO E&amp;C, this will happen. But the question is when, and the market was betting that it would not happen immediately.
But these bets collapsed yesterday. It is because Choo Kyung-ho, Deputy Prime Minister of Economy, publicly made remarks yesterday that seemed to pressure KEPCO to make additional self-rescue efforts.
KEPCO may aim at the level of ₩60,000 by applying a 5-7% discount rate from the mid-₩60,000 price. With this price in mind, we need to time this block deal.


Discussing How We Should Time the KEPCO E&C Block Deal

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

<ul>
<li>There are three major reasons we like a pair trade between Doosan Corp (go long) and Doosan Enerbility (go short). </li>
<li>First, share prices of two companies have diverged too much this year. Second, Doosan Corp is currently trading at a 76% discount to its NAV, which is excessive. </li>
<li>Third, as investors have poured capital into nuclear power themed Doosan Enerbility, they have neglected its parent Doosan Corp. </li>
</ul>


There are three major reasons we like a pair trade between Doosan Corp (go long) and Doosan Enerbility (go short). 
First, share prices of two companies have diverged too much this year. Second, Doosan Corp is currently trading at a 76% discount to its NAV, which is excessive. 
Third, as investors have poured capital into nuclear power themed Doosan Enerbility, they have neglected its parent Doosan Corp. 


A Pair Trade Between Doosan Corp & Doosan Enerbility

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>The former Doosan Group Chairman Park Yong-Man and his sons will sell 1.296 million shares of Doosan Corp (000150 KS) in a block deal, representing 7.85% of outstanding shares.</li>
<li>We have a positive view of this block deal sale and we would take the deal.</li>
<li>Our NAV analysis of Doosan Corp suggests NAV per share of 188,511 won per share, representing a 61% upside from current levels. </li>
</ul>


The former Doosan Group Chairman Park Yong-Man and his sons will sell 1.296 million shares of Doosan Corp (000150 KS) in a block deal, representing 7.85% of outstanding shares.
We have a positive view of this block deal sale and we would take the deal.
Our NAV analysis of Doosan Corp suggests NAV per share of 188,511 won per share, representing a 61% upside from current levels. 


Doosan Corp: Block Deal Sale of Former Chairman Park & His Sons' Stakes

Cross Asset Strategy

<ul>
<li>Yoon Suk-Yeol was elected the new President of South Korea on 10 March.</li>
<li>As the next President of South Korea, Yoon will certainly try to increase much needed housing supply and this will certainly benefit the major construction companies in Korea.</li>
<li>Another major sector that will likely benefit as a result of Yoon becoming the President is the nuclear industry.</li>
</ul>


Yoon Suk-Yeol was elected the new President of South Korea on 10 March.
As the next President of South Korea, Yoon will certainly try to increase much needed housing supply and this will certainly benefit the major construction companies in Korea.
Another major sector that will likely benefit as a result of Yoon becoming the President is the nuclear industry.


Yoon Suk-Yeol Becomes the New President of South Korea

South Korea

Doosan Enerbility Co., Ltd. manufactures and distributes construction machines. The Company produces gas turbines, engines, turbine generators, boilers, power plant equipment, and other related products. Doosan Enerbility also offers energy solutions for thermal power, nuclear power, and renewable energy.

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Doosan Enerbility (034020 KS)

Discussing How We Should Time the KEPCO E&C Block Deal

This post gives the background story surrounding the KEPCO E&C block deal and discusses how we should time this stake sale event.

Sanghyun Park

A Pair Trade Between Doosan Corp & Doosan Enerbility

There are three major reasons we like a pair trade between Doosan Corp (go long) and Doosan Enerbility (go short). Doosan Corp is currently trading...

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

Doosan Corp: Block Deal Sale of Former Chairman Park & His Sons' Stakes

The former Doosan Group Chairman Park Yong-Man and his sons will sell 1.296 million shares of Doosan Corp (000150 KS) in a block deal, representing...

Douglas Kim

Yoon Suk-Yeol Becomes the New President of South Korea

Yoon Suk-Yeol was elected the new President of South Korea on 10 March. Can he become the first ever hero President in South Korea, in the likes of...

Douglas Kim

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