Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>According to the Stockholm International Peace Research Institute (SIPRI), total global military expenditure increased by 3.7% in real terms in 2022, to reach a new high of $2,240bn.</li>
<li>A number of European states significantly increased their military spending following Russia’s invasion of Ukraine. Elsewhere, Japan’s 2022 military spending accounts for 1.1% of GDP, the highest level since 1960.</li>
<li>South Korea had four companies inside the world’s top 100 arms manufacturers in 2021. These conglomerates are expected to move up the ranking in 2022. </li>
</ul>


According to the Stockholm International Peace Research Institute (SIPRI), total global military expenditure increased by 3.7% in real terms in 2022, to reach a new high of $2,240bn.
A number of European states significantly increased their military spending following Russia’s invasion of Ukraine. Elsewhere, Japan’s 2022 military spending accounts for 1.1% of GDP, the highest level since 1960.
South Korea had four companies inside the world’s top 100 arms manufacturers in 2021. These conglomerates are expected to move up the ranking in 2022. 


Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

<ul>
<li>The Starlink service is expected to be launched in Korea in 2Q/3Q 2023. Starlink gained more than 1 million active subscribers globally as of December 2022.</li>
<li>The launch of the Starlink service in Korea is likely to have a positive impact on  companies such as Hanwha Aerospace, Solu-M, Intellian Technologies, and Satrec Initiative.</li>
<li>We like a pair trade involving long (basket of 8 stocks above that are positively impacted by Starlink launch in Korea) and short (three major Korean telcos).</li>
</ul>


The Starlink service is expected to be launched in Korea in 2Q/3Q 2023. Starlink gained more than 1 million active subscribers globally as of December 2022.
The launch of the Starlink service in Korea is likely to have a positive impact on  companies such as Hanwha Aerospace, Solu-M, Intellian Technologies, and Satrec Initiative.
We like a pair trade involving long (basket of 8 stocks above that are positively impacted by Starlink launch in Korea) and short (three major Korean telcos).


Launch of Starlink Service by SpaceX - Impact on 11 Korean Companies

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.

<ul>
<li>Price adjustment by passive flow started one month before the effective date. The LONG/SHORT basket set a month towards the effective dates provided a higher yield than seven days ahead.</li>
<li>The yield tended to be relatively low when the overall market was in a bearish phase. We see a positive correlation between the yields and the market direction.</li>
<li>Overall, the LONG/SHORT basket trading on this event over the past decade has shown a fairly high persistence and winning rate, substantial enough for us to have a careful look.</li>
</ul>


Price adjustment by passive flow started one month before the effective date. The LONG/SHORT basket set a month towards the effective dates provided a higher yield than seven days ahead.
The yield tended to be relatively low when the overall market was in a bearish phase. We see a positive correlation between the yields and the market direction.
Overall, the LONG/SHORT basket trading on this event over the past decade has shown a fairly high persistence and winning rate, substantial enough for us to have a careful look.


KOSPI Size Index Migration: 10-Year Backtesting

<ul>
<li>The acquisition will be carried out through a third-party allocation rights offering. DSME will issue 104M new shares, solely allocated to Hanwha's six affiliates, which will own a combined 49.3%</li>
<li>This DSME acquisition will likely raise Hanwha's holding ratio, potentially to more than 50%. What preemptive measures Hanwha will take will likely become a noteworthy subject from an investment perspective.</li>
<li>Hanwha Aerospace and Hanwha Systems will likely proceed with a capital increase. As their current cash capacity is quite limited, liquidity concerns will likely be raised in the market.</li>
</ul>


The acquisition will be carried out through a third-party allocation rights offering. DSME will issue 104M new shares, solely allocated to Hanwha's six affiliates, which will own a combined 49.3%
This DSME acquisition will likely raise Hanwha's holding ratio, potentially to more than 50%. What preemptive measures Hanwha will take will likely become a noteworthy subject from an investment perspective.
Hanwha Aerospace and Hanwha Systems will likely proceed with a capital increase. As their current cash capacity is quite limited, liquidity concerns will likely be raised in the market.


A Detailed Summary of Hanwha's DSME Acquisition Deal

<ul>
<li>The results are pretty much in line with the predictions, except for Hanwha Aerospace which made it to LARGE instead of Hyundai Marine &amp; Fire Insurance.</li>
<li>Assuming that ten names, including Hyundai Marine, were traded in a LONG/SHORT basket with equal weight, the yield from August 17 to the last close would have been 4.6%.</li>
<li>I would still approach with an equal-weighted basket trading until this Thursday. This flow trading usually loses its effect rapidly after rebalancing. So, I wouldn't carry it beyond this Thursday.</li>
</ul>


The results are pretty much in line with the predictions, except for Hanwha Aerospace which made it to LARGE instead of Hyundai Marine &amp; Fire Insurance.
Assuming that ten names, including Hyundai Marine, were traded in a LONG/SHORT basket with equal weight, the yield from August 17 to the last close would have been 4.6%.
I would still approach with an equal-weighted basket trading until this Thursday. This flow trading usually loses its effect rapidly after rebalancing. So, I wouldn't carry it beyond this Thursday.


KOSPI Size Index Migration: Official Results & Trading Approach Towards Implementation

South Korea

Hanwha Aerospace Co., Ltd. operates as an aircraft parts manufacturing company. The Company produces and sells aircraft gas turbine engine products, aircraft compressors, low pressure turbines, and other products. Hanwha Aerospace markets its products worldwide.

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

Hanwha Aerospace (012450 KS)

Asian Defence Contractors: Up In Arms

Defence spending beneficiaries include Hyundai Rotem (064350 KS) and Aerospace Industrial Development (2634 TT). For relval, short Poongsan Corp...

David Blennerhassett

Launch of Starlink Service by SpaceX - Impact on 11 Korean Companies

The launch of the SpaceX's Starlink service in Korea in 2Q/3Q 2023 is likely to have a positive impact on companies such as Hanwha Aerospace, Solu...

Douglas Kim

KOSPI Size Index Migration: 10-Year Backtesting

This post backtests the KOSPI Size Index Migration events, going for ten years from September of this year to March 2012, and discusses the yields...

Sanghyun Park

A Detailed Summary of Hanwha's DSME Acquisition Deal

This post details the terms, shareholdings, and schedule of Hanwha's DSME acquisition deal and touches on the thinking points from a trading...

Sanghyun Park

KOSPI Size Index Migration: Official Results & Trading Approach Towards Implementation

This post looks at the official results of the KOSPI Size Index migration in the September rebalancing and discusses the noteworthy flow patterns...

Sanghyun Park

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)