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>Opposition's probable win in the election sparks concerns about Value-up initiative's momentum. However, market sentiment doesn't universally echo these worries.</li>
<li>Value-Up stocks' recent corrections likely stem from Q4 dividend arbitrage liquidation, rather than election result concerns.</li>
<li>Post-Election, even if the opposition wins, the left-leaning Value-up program might continue, limiting the opposition's influence, as seen in recent National Pension Service flows.</li>
</ul>


Opposition's probable win in the election sparks concerns about Value-up initiative's momentum. However, market sentiment doesn't universally echo these worries.
Value-Up stocks' recent corrections likely stem from Q4 dividend arbitrage liquidation, rather than election result concerns.
Post-Election, even if the opposition wins, the left-leaning Value-up program might continue, limiting the opposition's influence, as seen in recent National Pension Service flows.


Observations on Post-Election Flows of Value-Up Stocks, Based on Recent Local Institutional Trades

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/samyang-tongsang-co-ltd" target="_blank" data-smartkarma-citation="entities:19909:1" rel="noopener">Samyang Tongsang (002170 KS)</a> is the 14th company in our Korea Small Cap Gems series.</li>
<li>Samyang Tongsang's net cash/market cap ratio is 124%, one of the highest among Korea companies with more than 100 billion won in market cap. </li>
<li>Chairman Huh (age 84) still has a 20% stake in the company. There could be material changes to corporate governance if the ownership structure changes in a few years.</li>
</ul>



Samyang Tongsang (002170 KS) is the 14th company in our Korea Small Cap Gems series.
Samyang Tongsang's net cash/market cap ratio is 124%, one of the highest among Korea companies with more than 100 billion won in market cap. 
Chairman Huh (age 84) still has a 20% stake in the company. There could be material changes to corporate governance if the ownership structure changes in a few years.


Korea Small Cap Gem #14: Samyang Tongsang

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 are quite a few stocks in Korea that have underperformed their peers and could be deleted from global passive portfolios in February.</li>
<li>There are still 3 weeks left for the stocks to redeem themselves and avoid relegation from the K League, so watch out for big price moves.</li>
<li>Based on our estimate of passive assets, trackers will need to trade between US$45m to US$114m of the stocks. Impact will vary between 2.6x-30x of ADV to trade.</li>
</ul>


There are quite a few stocks in Korea that have underperformed their peers and could be deleted from global passive portfolios in February.
There are still 3 weeks left for the stocks to redeem themselves and avoid relegation from the K League, so watch out for big price moves.
Based on our estimate of passive assets, trackers will need to trade between US$45m to US$114m of the stocks. Impact will vary between 2.6x-30x of ADV to trade.


Korea: Potential Relegations from K League 1

<ul>
<li>During the public hearing, Lee Jae-myung asked Simpac's CFO about their 0.3x PBR, then remarked, "That’s prime territory for a hostile M&amp;A."</li>
<li>With PBRs under 0.3x, these companies may roll out shareholder returns to manage political pressure—definitely worth tracking from a value-up trading perspective.</li>
<li>Hanwha is interesting due to its room for shareholder returns and potential merger with Hanwha Energy. With the new Commercial Act, a public tender offer is likely. Worth watching closely.</li>
</ul>


During the public hearing, Lee Jae-myung asked Simpac's CFO about their 0.3x PBR, then remarked, "That’s prime territory for a hostile M&amp;A."
With PBRs under 0.3x, these companies may roll out shareholder returns to manage political pressure—definitely worth tracking from a value-up trading perspective.
Hanwha is interesting due to its room for shareholder returns and potential merger with Hanwha Energy. With the new Commercial Act, a public tender offer is likely. Worth watching closely.


Korea’s Dem Leader: PBR Under 0.3x Should Be Hostile M&A Targets – Names That Could Feel the Heat

Douglas Research Advisory

<ul>
<li>In this insight, we highlight the recent pricing gap divergences of the major Korean holdcos and opcos which could provide trading opportunities in 4Q 2024.</li>
<li>Volatility has been high in the Korean stock market in the past several weeks resulting in some interesting widening of some gaps among numerous holdcos and opcos in Korea. </li>
<li>Of the 38 pair trades, 19 of them involved holdcos outperforming opcos in the past six months and the other 19 opcos outperforming holdcos in the same period. </li>
</ul>


In this insight, we highlight the recent pricing gap divergences of the major Korean holdcos and opcos which could provide trading opportunities in 4Q 2024.
Volatility has been high in the Korean stock market in the past several weeks resulting in some interesting widening of some gaps among numerous holdcos and opcos in Korea. 
Of the 38 pair trades, 19 of them involved holdcos outperforming opcos in the past six months and the other 19 opcos outperforming holdcos in the same period. 


Korean Holdcos Vs Opcos Gap Trading Opportunities in 4Q 2024

South Korea

GS Holdings is a holding company, which operates subsidiaries including GS Caltex Oil, GS Power, GS Home Shopping, GS Retail, and GS Sports.

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GS Holdings (078930 KS)

Observations on Post-Election Flows of Value-Up Stocks, Based on Recent Local Institutional Trades

This post outlines my observations on the post-election flows of Value-up beneficiary stocks, derived from recent local institutional trades.

Sanghyun Park

Korea Small Cap Gem #14: Samyang Tongsang

Samyang Tongsang has net cash of 215 billion won. Given that its market cap of 173 billion won, its net cash/market cap ratio is 124%.

Douglas Kim

Korea: Potential Relegations from K League 1

There could be 10 deletes from global passive portfolios in Feb. Trackers will need to trade between US$45m to US$114m of the stocks. Impact will...

Brian Freitas

Korea’s Dem Leader: PBR Under 0.3x Should Be Hostile M&A Targets – Names That Could Feel the Heat

The Democratic Party leader’s bold move: “A PBR under 0.3x is prime for a hostile M&A target.” Here are the stocks that could feel the heat.

Sanghyun Park

Korean Holdcos Vs Opcos Gap Trading Opportunities in 4Q 2024

In this insight, we highlight the recent pricing gap divergences of the major Korean holdcos and opcos which could provide trading opportunities in...

Douglas Kim

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