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>All of these additions experienced significant levels of short trading yesterday. In particular, those newly listed stocks saw harsher shorting attacks, similar to what we witnessed at the last rebalancing.</li>
<li>A certain level of short selling trend for newly listed stocks will likely work the same this time, and the applicable period is expected to be 3-4 trading days.</li>
<li>That is, we need to target the newly listed stocks again for this rebalancing: Iljin Hysolus (271940 KS), K Car (381970 KS), and SD Biosensor (137310 KS).</li>
</ul>


All of these additions experienced significant levels of short trading yesterday. In particular, those newly listed stocks saw harsher shorting attacks, similar to what we witnessed at the last rebalancing.
A certain level of short selling trend for newly listed stocks will likely work the same this time, and the applicable period is expected to be 3-4 trading days.
That is, we need to target the newly listed stocks again for this rebalancing: Iljin Hysolus (271940 KS), K Car (381970 KS), and SD Biosensor (137310 KS).


Shorting Trend Projections on KOSPI 200 Additions

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 7 adds and 7 deletes 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> rebalance to be implemented at the close on 9 June.</li>
<li>There are also a bunch of stocks that will have changes applied to their free float. There were announced last week and are much less tracked.</li>
<li>The flows and impact on some of the float change names are significant and pre-positioning and passive flows could move the stocks over the next few days.</li>
</ul>


There are 7 adds and 7 deletes for the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) rebalance to be implemented at the close on 9 June.
There are also a bunch of stocks that will have changes applied to their free float. There were announced last week and are much less tracked.
The flows and impact on some of the float change names are significant and pre-positioning and passive flows could move the stocks over the next few days.


KOSPI200 Index Rebalance: Float Changes, Flows & Trades

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

JD.com Inc (ADR) / Equity Capital Markets

<ul>
<li>Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.</li>
<li>With LIC not delivering and Delhivery needing insurance, combined with the Korean cancellations and HK silence, it looks like its going to be a quiet few weeks for IPOs.</li>
<li>On placements, both the Korean deals were a disappointment, despite being well-flagged.</li>
</ul>


Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
With LIC not delivering and Delhivery needing insurance, combined with the Korean cancellations and HK silence, it looks like its going to be a quiet few weeks for IPOs.
On placements, both the Korean deals were a disappointment, despite being well-flagged.


ECM Weekly (22nd May 22) - JD, LIC, Delhivery, Leapmotor, Vista, Paradeep, Woori, Hyundai Heavy, NIO

<ul>
<li>The KDIC sold a 2.33% stake in Woori Financial through an after-hours block sale. From a passive flow perspective, this is quite similar to KSOE's HHI block deals yesterday.</li>
<li>Woori is likely to show a similar share price movement as HHI. Expectations for the passive inflow effect must have dissipated, and a short-term share price correction is now inevitable.</li>
<li>However, the passive inflow sizes are still too substantial. With this in mind, we need to consider a strategy that approaches this price correction as a re-entry opportunity.</li>
</ul>


The KDIC sold a 2.33% stake in Woori Financial through an after-hours block sale. From a passive flow perspective, this is quite similar to KSOE's HHI block deals yesterday.
Woori is likely to show a similar share price movement as HHI. Expectations for the passive inflow effect must have dissipated, and a short-term share price correction is now inevitable.
However, the passive inflow sizes are still too substantial. With this in mind, we need to consider a strategy that approaches this price correction as a re-entry opportunity.


Woori Financial Block Deals: Another Shares Let-Go Event for Passive Buying

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

HD Hyundai Heavy Industries  / Event-Driven

<ul>
<li>After the market close today, Korea Shipbuilding &amp; Offshore Engineering announced that will sell 1.7% of its shares (1.5 million shares) in Hyundai Heavy Industries in a block deal.</li>
<li>The block deal sale is expected to take place on the morning of 17 May. The block deal price is expected to be 120,650 won.</li>
<li>We would take this deal as we believe this sale is likely to have a short term positive impact on HHI and increase the free float of HHI.</li>
</ul>


After the market close today, Korea Shipbuilding &amp; Offshore Engineering announced that will sell 1.7% of its shares (1.5 million shares) in Hyundai Heavy Industries in a block deal.
The block deal sale is expected to take place on the morning of 17 May. The block deal price is expected to be 120,650 won.
We would take this deal as we believe this sale is likely to have a short term positive impact on HHI and increase the free float of HHI.


Block Deal Sale of Hyundai Heavy Industries

South Korea

HD Korea Shipbuilding & Offshore Engineering Co., Ltd. operates as a shipbuilding and offshore company. The Company provides industrial plant engineering, special and naval shipbuilding, marine engine and machinery, industrial machinery and energy services. HD Korea Shipbuilding & Offshore Engineering markets its products worldwide.

HD Korea Shipbuilding & Offshore Engineering (009540 KS)

HD Korea Shipbuilding & Offshore Engineering

Hanwha Ocean Co., Ltd. operates as a shipbuilding and offshore company. The Company provides floating structure construction, steel wire drying, commercial vessels, specialty vessels, gas carrier, tanker, containership, ro ro, bulk carrier, submarine, warship, auxiliaries, cruise ships, and ferries manufacturing services. Hanwha Ocean also offers onshore plants services.

Samsung Heavy Industries Co., Ltd. manufactures crude oil tankers, container vessels, bulk carriers, cruisers, and passenger ferries.  The Company also produces steel and bridge structures, and material handling equipment.  In addition, Samsung Heavy Industries provides civil engineering, architectural, and plant construction services.

Hyundai Rotem Company Ltd. manufactures railroad equipment and defense vehicles. The Company produces high-speed trains, light rail vehicles, locomotives, and passenger coaches, main battle tanks, armored recovery vehicles, and related defense equipment. Hyundai Rotem operates worldwide.

Hyundai Mipo Dockyard Co., Ltd. is shipbuilders in the sectors of medium-sized conventional ships and specialized vessels. The Company constructs and delivers medium-ranged product carriers, chemical tankers, containerships, LPG carriers, pure car truck carriers and others.

Bobcat Company specializes in design, manufacture, marketing and distribution of compact equipment for construction, rental, landscaping, agriculture, grounds maintenance, government, utility, industry and mining.

Hyundai Elevator Co., Ltd. (HELCO) manufactures, installs, sells, and services elevators, escalators, moving walkways, automated parking systems, and material handling systems.  The Company also produces screen doors used on platforms in train stations.

HSD Engine Co., Ltd. is an integrated engine manufacturer specializing in producing diesel engine for large vessels. The Company provides business in diesel power plant construction and operation, engine parts sales, and engine maintenance and repair services.

People and Technology INC is a company manufacturing in Secondary Battery and Semiconductors.

STX Heavy Industries Co., Ltd. manufactures diesel engine components for ships. The Company's products include crank shafts, cylinder liners, turbo chargers, and cargo pumps.

XCMG Construction Machinery Co., Ltd. manufactures and markets a variety of construction machinery including road construction machinery, scrapers, concrete mixers and other related products.

XCMG Construction Machinery A (000425 CH)

Yangzijiang Shipbuilding (Holdings) Limited builds a wide range of ships. The Company produces a wide range of commercial vessels, mini bulk carriers, multi-purpose cargo vessels, containerships, chemical tankers, offshore supply vessels, rescue and salvage vessels, and lifting vessels.

Stanley Black & Decker Inc. is a diversified global provider of hand tools, power tools and related accessories, mechanical access and electronic security solutions, healthcare solutions, engineered fastening systems, and more.

Graco Inc. supplies technology for the management of fluids in both industrial and commercial applications.  The Company designs, manufactures, and markets systems to move, measure, control, dispense, and apply fluid materials.  Graco's products are used for applying paints and coatings, high-pressure cleaning of equipment, and lubricating and maintaining vehicles and other equipment.

Donaldson Company, Inc. manufactures filtration systems and replacement parts. The Company's products include filters and emission control products for heavy duty mobile equipment, in-plant air cleaning systems, air intake systems for industrial gas turbines, and specialized filters for computer disk drives, aircraft cabins, and semiconductors. Donaldson operates around the world.

Nordson Corporation designs, manufactures, and markets systems that apply adhesives, sealants, and coatings to consumer and industrial products during manufacturing operations.  The Company's products include customized electronic controls for the precise application and curing of materials to meet customers' requirements.  Nordson operates around the world.

AGCO Corporation manufactures and distributes agricultural equipment throughout the world.  The Company sells a range of agricultural equipment and related replacement parts, including tractors, combines, hay tools, sprayers, and forage equipment.  AGCO markets its products under a variety of brand names, including Massey Ferguson, AGCO, Tye, GLEANER, and Hesston.

Thermax Ltd manufactures equipment and machinery used to both produce and to conserve energy. The Company operates through a number of divisions, including Boilers, Heat Recovery Steam Generators, Water Treatment Plants and Air Pollution Control Equipment. In addition, Thermax  produces steam and gas turbines and diesel gensets through a number of strategic alliances.

EBARA CORPORATION manufactures pneumatic and hydraulic pumps and related equipment.  The Company's products include fuel, oil, water, and firefighting pumps, as well as steam turbines and boilers.  Ebara Corporation also engineers garbage incinerators, smoke desulfurizers, and other products related to environmental technology.

Minebea Mitsumi manufactures and markets miniature and instrument ball bearings.  The Company also makes DC motors, servo motors, stepping motors, spindle motors, pivot assemblies, rod-end and spherical bearings, fasteners, and computer keyboards. Minebea Mitsumi has production facilities in Thailand and Singapore.

HD Hyundai Heavy Industries Co., Ltd. operates as a shipbuilding company. The Company provides naval shipbuilding, industrial shipbuilding, crude oil tanker, bulk carrier, container carrier, and other related services. HD Hyundai Heavy Industries also offers offshore and engineering, engine and machinery, offshore, industrial, and marine plant services.

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HD Hyundai Heavy Industries (329180 KS)

Shorting Trend Projections on KOSPI 200 Additions

This post examines the shorting patterns for the KOSPI 200 additions at the last rebalancing and argues the same patterns will likely repeat for...

Sanghyun Park

KOSPI200 Index Rebalance: Float Changes, Flows & Trades

There are significant flows and impact on some stocks that have float changes at the upcoming KOSPI2 rebalance. With over 5 days ADV to buy,...

Brian Freitas

ECM Weekly (22nd May 22) - JD, LIC, Delhivery, Leapmotor, Vista, Paradeep, Woori, Hyundai Heavy, NIO

Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.

Sumeet Singh

Woori Financial Block Deals: Another Shares Let-Go Event for Passive Buying

This post examines the Woori Financial Group block deals by the KDIC this morning, which should be another shares let-go event for passive buying,...

Sanghyun Park

Block Deal Sale of Hyundai Heavy Industries

After the market close today, Korea Shipbuilding & Offshore Engineering announced that will sell 1.7% of its shares (1.5 million shares) in Hyundai...

Douglas Kim

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