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>The effective date for rebalancing KOSPI 200 and KOSDAQ 150 is this Friday. This is the first trading day that short selling is permitted on new stocks in these indexes.</li>
<li>From the 25th to today, immediately after the inclusion of these indexes was announced, the loan share balance of almost all stocks increased significantly.</li>
<li>Those stocks with substantial outperformance in price and relatively abundant liquidity have a high level of loan balance.</li>
</ul>


The effective date for rebalancing KOSPI 200 and KOSDAQ 150 is this Friday. This is the first trading day that short selling is permitted on new stocks in these indexes.
From the 25th to today, immediately after the inclusion of these indexes was announced, the loan share balance of almost all stocks increased significantly.
Those stocks with substantial outperformance in price and relatively abundant liquidity have a high level of loan balance.


Short Position Approach on the Index Entrants on December 10 in Korea

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

<ul>
<li>There are 15 inclusions and 15 exclusions for the <a href="https://www.smartkarma.com/entities/kosdaq-150-index" target="_blank" data-smartkarma-citation="entities:31077:1" rel="noopener">KOSDAQ 150 Index (KOSDQ150 INDEX)</a> at the next rebalance to be implemented at the close on 9 December.</li>
<li>The inclusions were expected but there are a few surprises among the deletions as the Information Technology sector was spared at the expense of the Health Care sector.</li>
<li>Over the last couple of months, the inclusions have given up their early gains versus the deletions. With the announcement made, the inclusions could outperform over the next few weeks.</li>
</ul>


There are 15 inclusions and 15 exclusions for the KOSDAQ 150 Index (KOSDQ150 INDEX) at the next rebalance to be implemented at the close on 9 December.
The inclusions were expected but there are a few surprises among the deletions as the Information Technology sector was spared at the expense of the Health Care sector.
Over the last couple of months, the inclusions have given up their early gains versus the deletions. With the announcement made, the inclusions could outperform over the next few weeks.


KOSDAQ150 Index Rebalance: Pullback Done; Buy Adds & Sell Deletes

Global Healthcare Analyst

Tina Banerjee

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/hk-inno-n-corp" target="_blank" data-smartkarma-citation="entities:33522:1" rel="noopener">HK inno.N (INNO KS)</a>'s new digestive disease drug K-CAB is the only drug of its class available in Korean market and has superior efficacy than the current standard of care. </li>
<li>K-CAB has already become the no. 1 drug in Korean digestive treatment market. HK inno plans to further strengthen its position by expanding global presence and increasing indication approvals.</li>
<li>From this year, HK inno has started distributing Merck’s seven vaccines, including its largest selling HPV vaccine 'Gardasil' in Korea. The company also has a rich pipeline of innovative drugs.</li>
</ul>



HK inno.N (INNO KS)'s new digestive disease drug K-CAB is the only drug of its class available in Korean market and has superior efficacy than the current standard of care. 
K-CAB has already become the no. 1 drug in Korean digestive treatment market. HK inno plans to further strengthen its position by expanding global presence and increasing indication approvals.
From this year, HK inno has started distributing Merck’s seven vaccines, including its largest selling HPV vaccine 'Gardasil' in Korea. The company also has a rich pipeline of innovative drugs.


HK Inno.N (INNO KS): On a Solid Growth Path with Blockbuster New Drug K-CAB

<p>The KOSDAQ 150 has no Fast Entry rule for IPO stocks.</p><p>However, it has the rule to include the stocks not meeting the minimum listing period of 6 months at a regular bi-annual rebalancing if the following condition is satisfied.</p><div class="content-highlight"><p><strong>A stock is in the top 50 ordinary stocks on KOSDAQ by full market capitalization.</strong></p></div><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/240/350/original/Screen+Shot+2021-11-08+at+4.43.27+AM.png?1636364839" class="editor-image img-responsive" data-smartkarma-image-id="240350"></figure></section><div class="content-caption">(Source: KOSDAQ 150 Methodology)</div><p>So what is the calculation period? It is simple. The KRX uses the average daily market capitalization for 15 trading days from the screening base date. The screening base date for this December regular rebalancing is October 31.</p><div class="content-highlight"><p><strong>So the 15 trading day review period is from October 8 to October 29.</strong></p></div><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/240/352/original/Screen+Shot+2021-11-08+at+4.43.54+AM.png?1636364975" class="editor-image img-responsive" data-smartkarma-image-id="240352"></figure></section><div class="content-caption">(Source: KOSDAQ 150 Methodology)</div>

The KOSDAQ 150 has no Fast Entry rule for IPO stocks.However, it has the rule to include the stocks not meeting the minimum listing period of 6 months at a regular bi-annual rebalancing if the following condition is satisfied.A stock is in the top 50 ordinary stocks on KOSDAQ by full market capitalization.(Source: KOSDAQ 150 Methodology)So what is the calculation period? It is simple. The KRX uses the average daily market capitalization for 15 trading days from the screening base date. The screening base date for this December regular rebalancing is October 31.So the 15 trading day review period is from October 8 to October 29.(Source: KOSDAQ 150 Methodology)

KOSDAQ 150 Exceptional Addition of Large-Scale Stocks: Ecopro HN & HK Inno.N

Equity Capital Markets


Final Allocations

HK Inno.N's allocation results are now available at DART.
Here is the link to the allocation results at DART.
Institutional investors again took 55% of the total offering, retail took 25%, and the ESOP has fully subscribed to the 20% allocation.

We can find quite interesting outcomes from the institutional allocations. Most of the local hedge funds, which accounted for 25% of the subscription applications, were excluded from the final allocation. 
On the other hand, it is safe to say that local publicly-raised funds with long-term holding tendencies took all the institutional allocations.
Another interesting point here is that local pensions, which also have long-term holding tendencies, received almost no allocation. 
This will be discussed in more detail later, but the direct cause must be the low number of lockup applications. If so, it proves that there must have been virtually no pension funds participating in this bookbuilding among institutional investors in the category to which the local pensions belong.
That is, proprietary asset managers with relatively short-term holding tendencies, which are grouped in the same category as the local pensions, must have constituted the majority. Since HK Inno.N is a stock listing on the KOSDAQ, it seems that major pension funds such as the National Pension Service did not participate.












By investor type
Holding tendencies
Applications
Allocated, % of the offering


Local publicly raised funds
Long-term
46.05%
75.74%


Local brokerages/investment advisories
Short-term
1.94%
0.16%


Local pensions, funds managing proprietary assets, banks, and insurance companies
Long-term (pensions ) &amp; short-term (proprietary asset managers)
13.78%
1.04%


Local others (mostly discretionary investment companies - local hedge funds))
Mainly, short-term
25.72%
1.23%


Foreign (foreign IPO funds &amp; hedge funds)
Depends
0.76%
21.82%


Foreign others (mostly local hot money)
Short-term
11.75%
0.01%

Source: DART


Below is the final quantity allocated to each institution type, local retail investors, and the ESOP.









Allocation by type
Allocated, % of the offering
Final, % of the offering
Final, % of post-IPO SO


Institutional
55.00%
55.00%
19.25%


1. Local publicly raised funds
-
41.66%
14.58%


2. Local Br/IA
-
0.09%
0.03%


3. Local pension, etc.
-
0.57%
0.20%


4. Local others
-
0.68%
0.24%


5. Foreign
-
12.00%
4.20%


6. Foreign, other
-
0.00%
0.00%


Retail
25.00%
25.00%
8.75%


ESOP
20.00%
20.00%
7.00%


Total
100.00%
100.00%
35.00%

Source: DART



Lockups
The final lockup rate is 26.60%. Considering that the lockup application rate was 13% in the first place, it can be seen that the proportion of lockup was increased as much as possible. This is why local publicly-raised funds took 75% of all institutional allocations. Even in allocations to foreign institutions, the issuer's efforts to allocate to long-only funds as much as possible can be detected as suggested in the Foreign - Other allocation results. 













Lock-up, by orders
1. Local PO
2. Local Br/IA
3. Local pension, etc.
4. Local others
5. Foreign
6. Foreign, other
Total


6 months
16.70%
0.00%
0.08%
0.03%
0.00%
0.01%
16.81%


3 months
3.56%
0.00%
0.03%
0.08%
0.00%
0.00%
3.67%


1 month
5.65%
0.02%
0.06%
0.05%
0.00%
0.00%
5.78%


15 days
0.26%
0.00%
0.05%
0.02%
0.00%
0.00%
0.34%


No lockup
49.57%
0.14%
0.83%
1.05%
21.82%
0.00%
73.40%


Total
75.74%
0.16%
1.04%
1.23%
21.82%
0.01%
100.00%

Source: DART



Hence, the amount released to the market immediately after the listing is 22.88% of the outstanding shares.










Post-IPO lockup releases, as a % of SO
IPO shareholders
Major shareholder
Pre-IPO minority shareholders
Total


2 years
0.00%
49.16%
0.00%
49.16%


1 year
0.00%
0.00%
0.00%
0.00%


6 months
3.24%
0.00%
22.84%
26.08%


3 months
0.71%
0.00%
0.00%
0.71%


1 month
1.11%
0.00%
0.00%
1.11%


15 days
0.07%
0.00%
0.00%
0.07%


No lock-up
22.88%
-
-
22.88%

Source: DART




HK Inno.N Post-Listing Immediate Float Analysis

South Korea

HK inno.N Corp. develops and manufactures pharmaceuticals products. The Company develops and sells immune anticancer drugs, blood disease drugs, kidney disease drugs, and other products. HK inno.N conducts businesses across worldwide.

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

HK inno.N (195940 KS)

Short Position Approach on the Index Entrants on December 10 in Korea

The effective date for rebalancing KOSPI 200 and KOSDAQ 150 is this Friday, meaning that this is the first trading day that short selling is...

Sanghyun Park

KOSDAQ150 Index Rebalance: Pullback Done; Buy Adds & Sell Deletes

There are 15 changes for the KOSDAQ150 index in December. The impact on the deletions is larger than that on the inclusions. A long adds/short...

Brian Freitas

HK Inno.N (INNO KS): On a Solid Growth Path with Blockbuster New Drug K-CAB

K-CAB has already become the no. 1 drug in Korean digestive treatment market. Thus far, K-CAB has marketing partnerships with 24 countries.

Tina Banerjee

KOSDAQ 150 Exceptional Addition of Large-Scale Stocks: Ecopro HN & HK Inno.N

This post examines the possibilities of Ecopro HN and HK inno.N's inclusion in the KOSDAQ 150 through the special entry rule in the upcoming...

Sanghyun Park

HK Inno.N Post-Listing Immediate Float Analysis

The real-world float is in the low 20%, which is purely made up of new investors who flowed in through the IPO. This is a fairly neat float...

Sanghyun Park

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52-week Range

Market Cap (USDm)

P/E

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