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>This offering is a 100% stockholder allocation with forfeited shares going to the public. There will be 9.56M new shares at a capital increase of nearly 9%.</li>
<li>We should note that the largest shareholder may again do the same trick. He may block-deal a 1% stake and use the proceeds to participate in this offering.</li>
<li>A massive release volume and a 25% discount rate may cause a severe pricing distortion, leading to arb trading openings.</li>
</ul>


This offering is a 100% stockholder allocation with forfeited shares going to the public. There will be 9.56M new shares at a capital increase of nearly 9%.
We should note that the largest shareholder may again do the same trick. He may block-deal a 1% stake and use the proceeds to participate in this offering.
A massive release volume and a 25% discount rate may cause a severe pricing distortion, leading to arb trading openings.


HLB Capital Increase: Offering Terms & Trading Dynamics

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

<ul>
<li>This is the second weekly series on the "Top 20 Best Performers in the Korean Stock Market Adjusted for Trading Value &amp; Mkt Cap." </li>
<li>Starting this weekly, we include stocks in both KOSPI and KOSDAQ. All the stocks in KOSPI and KOSDAQ are ranked, adjusted for market cap and trading value. </li>
<li>Among the top 20 performers, NCSoft, Hyundai Motor, Kia Motors, Dohwa Engineering, DB Hitek, SK Telecom, and KT Corp were included. </li>
</ul>


This is the second weekly series on the "Top 20 Best Performers in the Korean Stock Market Adjusted for Trading Value &amp; Mkt Cap." 
Starting this weekly, we include stocks in both KOSPI and KOSDAQ. All the stocks in KOSPI and KOSDAQ are ranked, adjusted for market cap and trading value. 
Among the top 20 performers, NCSoft, Hyundai Motor, Kia Motors, Dohwa Engineering, DB Hitek, SK Telecom, and KT Corp were included. 


Top 20 Best Performers in the Korean Stock Market (Week of 13 May)

<div class="content-highlight">
<p>The "K-Stop movement" made its first real move on <a href="https://www.smartkarma.com/entities/hlb-inc" target="_blank" data-smartkarma-citation="entities:16969:1" rel="noopener">HLB Inc (028300 KS) </a>on July 15th. The K-Stop movement refers to "Korean Game Stop movement," where many Korean retail investors have gathered together to actively protest and trade against the institutional investors that have put short positions on various Korean stocks. There are lots of interesting developments with the K-Stop movement so we will update on these key issues in this insight. </p>
<p><strong>Korea Stock Investors Association (한국주식투자자연합회) (KSIA) is the main sponsoring entity of this K-Stop Movement. On 1 August,<a href="https://www.news1.kr/articles/?4388150" target="_blank" rel="noopener"> KSIA</a> mentioned that it will once again pool the resources of the retail investors to target a specific company to buy on August 10th.</strong> The date was originally scheduled on August 15th but they decided to use August 10th instead due to the latter date being on a Sunday. </p>
</div><ul>
<li>In KOSDAQ, the top two potential stocks that KSIA may target on August 10th include <a href="https://www.smartkarma.com/entities/kmw-co-ltd" target="_blank" data-smartkarma-citation="entities:2834:1" rel="noopener">KMW Co Ltd (032500 KS)</a> and <a href="https://www.smartkarma.com/entities/seegene-inc" target="_blank" data-smartkarma-citation="entities:11483:1" rel="noopener">Seegene Inc (096530 KS)</a>. </li>
<li>In KOSPI, the top three potential stocks that KSIA may target on August 10th include <a href="https://www.smartkarma.com/entities/lotte-tour-development-co-ltd" target="_blank" data-smartkarma-citation="entities:5526:1" rel="noopener">Lotte Tour Development Co, Ltd. (032350 KS)</a>, <a href="https://www.smartkarma.com/entities/lg-display-co-ltd" target="_blank" data-smartkarma-citation="entities:7145:1" rel="noopener">LG Display (034220 KS)</a>, and <a href="https://www.smartkarma.com/entities/shinpoong-pharmaceutical-co-ltd" target="_blank" data-smartkarma-citation="entities:7296:1" rel="noopener">Shinpoong Pharmaceutical (019170 KS)</a>.</li>
</ul>


The "K-Stop movement" made its first real move on HLB Inc (028300 KS) on July 15th. The K-Stop movement refers to "Korean Game Stop movement," where many Korean retail investors have gathered together to actively protest and trade against the institutional investors that have put short positions on various Korean stocks. There are lots of interesting developments with the K-Stop movement so we will update on these key issues in this insight. 
Korea Stock Investors Association (한국주식투자자연합회) (KSIA) is the main sponsoring entity of this K-Stop Movement. On 1 August, KSIA mentioned that it will once again pool the resources of the retail investors to target a specific company to buy on August 10th. The date was originally scheduled on August 15th but they decided to use August 10th instead due to the latter date being on a Sunday. 

In KOSDAQ, the top two potential stocks that KSIA may target on August 10th include KMW Co Ltd (032500 KS) and Seegene Inc (096530 KS). 
In KOSPI, the top three potential stocks that KSIA may target on August 10th include Lotte Tour Development Co, Ltd. (032350 KS), LG Display (034220 KS), and Shinpoong Pharmaceutical (019170 KS).


K-Stop Movement: Round 2 on August 10th - What Are the Targets?

<div class="content-highlight">
<p>The "K-Stop movement" made its first real move on <a href="https://www.smartkarma.com/entities/hlb-inc" target="_blank" data-smartkarma-citation="entities:16969:1" rel="noopener">HLB Inc (028300 KS) </a>today on July 15th. The K-Stop movement refers to "Korean Game Stop movement," where many Korean retail investors have gathered together to actively protest and trade against the institutional investors that have put short positions on various Korean stocks.</p>
<p>Similar to many retail investors in US that have traded heavily shorted stocks such as <a href="https://www.smartkarma.com/entities/gamestop-corp-class-a" target="_blank" data-smartkarma-citation="entities:13790:1" rel="noopener">GameStop (GME US) </a>and AMC, many Korean retail investors also want to capitalize on such potential buying of heavily shorted stocks in Korea. </p>
</div>


The "K-Stop movement" made its first real move on HLB Inc (028300 KS) today on July 15th. The K-Stop movement refers to "Korean Game Stop movement," where many Korean retail investors have gathered together to actively protest and trade against the institutional investors that have put short positions on various Korean stocks.
Similar to many retail investors in US that have traded heavily shorted stocks such as GameStop (GME US) and AMC, many Korean retail investors also want to capitalize on such potential buying of heavily shorted stocks in Korea. 


The Rise of the K-Stop Movement: Makes Its First Real Move on HLB

<p>The Korea FSC announced a new stock lending service specifically designed for local retail investors.</p><p>It is much broader in size and scope than the existing one.</p><p>The number of participating brokerages rises from 6 to 28. The lending pool totals ₩2.4T, a substantial increase from ₩0.02T.</p><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr>
<td data-sheets-value='{"1":2,"2":"Stock lending service"}'>Stock lending service</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Before"}'>Before</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"New"}'>New</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Number of participating brokerages"}'>Number of participating brokerages</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":6}'>6</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":28}'>28</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Lending size"}'>Lending size</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"₩20.5B"}'>₩20.5B</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"₩2,400.0B"}'>₩2,400.0B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Eligible stocks"}'>Eligible stocks</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":393}'>393</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Short 350"}'>
<p>Short 350 for now</p>
<p>(Most listed stocks later)</p>
</td>
</tr>
<tr><td colspan="3" rowspan="1" data-sheets-value='{"1":2,"2":"Source: KRX"}'>Source: KRX</td></tr>
</tbody>
</table><p>A total of 17 local brokerages begin to offer the new service right starting May 3. The other 11 brokerages will join within the end of this year.</p><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr><td colspan="3" rowspan="1" data-sheets-value='{"1":2,"2":"Participating brokerages"}'>Participating brokerages</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Before"}'>Before</td>
<td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"New"}'>New</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"NH"}'>NH</td>
<td colspan="1" rowspan="18" data-sheets-value='{"1":2,"2":"Starting May 3"}'><div><strong>Starting May 3</strong></div></td>
<td data-sheets-value='{"1":2,"2":"NH"}'><strong>NH</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Kiwoom"}'>Kiwoom</td>
<td data-sheets-value='{"1":2,"2":"Kiwoom"}'><strong>Kiwoom</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Shinhan"}'>Shinhan</td>
<td data-sheets-value='{"1":2,"2":"Shinhan"}'><strong>Shinhan</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Daishin"}'>Daishin</td>
<td data-sheets-value='{"1":2,"2":"Daishin"}'><strong>Daishin</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"SK"}'>SK</td>
<td data-sheets-value='{"1":2,"2":"SK"}'><strong>SK</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Yuanta"}'>Yuanta</td>
<td data-sheets-value='{"1":2,"2":"Yuanta"}'><strong>Yuanta</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"-"}'>-</td>
<td data-sheets-value='{"1":2,"2":"KIS"}'><strong>KIS</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"-"}'>-</td>
<td data-sheets-value='{"1":2,"2":"Hana"}'><strong>Hana</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"-"}'>-</td>
<td data-sheets-value='{"1":2,"2":"KB"}'><strong>KB</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"-"}'>-</td>
<td data-sheets-value='{"1":2,"2":"Samsung"}'><strong>Samsung</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"-"}'>-</td>
<td data-sheets-value='{"1":2,"2":"Kyobo"}'><strong>Kyobo</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"-"}'>-</td>
<td data-sheets-value='{"1":2,"2":"Mirae Asset"}'><strong>Mirae Asset</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"-"}'>-</td>
<td data-sheets-value='{"1":2,"2":"Cape"}'><strong>Cape</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"-"}'>-</td>
<td data-sheets-value='{"1":2,"2":"BNK"}'><strong>BNK</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"-"}'>-</td>
<td data-sheets-value='{"1":2,"2":"Sangsangin"}'><strong>Sangsangin</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"-"}'>-</td>
<td data-sheets-value='{"1":2,"2":"Hanyang"}'><strong>Hanyang</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"-"}'>-</td>
<td data-sheets-value='{"1":2,"2":"BNK"}'><strong>BNK</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"-"}'>-</td>
<td data-sheets-value='{"1":2,"2":"Bookook"}'><strong>Bookook</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"-"}'>-</td>
<td colspan="1" rowspan="11" data-sheets-value='{"1":2,"2":"By the end of the year"}'><div>By the end of the year</div></td>
<td data-sheets-value='{"1":2,"2":"eBest"}'>e-Best</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"-"}'>-</td>
<td data-sheets-value='{"1":2,"2":"Eugene"}'>Eugene</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"-"}'>-</td>
<td data-sheets-value='{"1":2,"2":"Hi"}'>Hi</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"-"}'>-</td>
<td data-sheets-value='{"1":2,"2":"Meritz"}'>Meritz</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"-"}'>-</td>
<td data-sheets-value='{"1":2,"2":"KTB"}'>KTB</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"-"}'>-</td>
<td data-sheets-value='{"1":2,"2":"IBK"}'>IBK</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"-"}'>-</td>
<td data-sheets-value='{"1":2,"2":"DB"}'>DB</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"-"}'>-</td>
<td data-sheets-value='{"1":2,"2":"Hanwha"}'>Hanwha</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"-"}'>-</td>
<td data-sheets-value='{"1":2,"2":"Hyundai Motor"}'>Hyundai Motor</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"-"}'>-</td>
<td data-sheets-value='{"1":2,"2":"Shinyoung"}'>Shinyoung</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"-"}'>-</td>
<td data-sheets-value='{"1":2,"2":"Yuhwa"}'>Yuhwa</td>
</tr>
<tr><td colspan="3" rowspan="1" data-sheets-value='{"1":2,"2":"Source: KRX"}'>Source: KRX</td></tr>
</tbody>
</table><p>The maximum lending period is 60 days. This is a guaranteed period. A borrower has up to 60 days of guaranteed period to keep the loaned stocks if they want.</p><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Conditions"}'>Conditions</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Max lending period"}'>Max lending period</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"60 days"}'>60 days</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Early repayment"}'>- Early repayment</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Only by borrowers"}'>Yes</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Lending fee"}'>Lending fee</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Set by brokerges"}'>Set by brokerages</td>
</tr>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Source: KRX"}'>Source: KRX</td></tr>
</tbody>
</table><p>Both borrowers and lenders can request early repayment.</p><p>But if a lender wants early repayment before the 60-day guaranteed period, the KSFC (Korea Securities Finance Corp) will repay out of the lending stock pool.</p><p><strong>The overall flow is quite simple. It is basically built around a stock loan structure with retail borrowers acting as a LP instead of a brokerage.</strong></p><p><strong>The KSFC serves as an intermediary operating a lending stock pool.</strong></p><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
<col width="100">
<col width="100">
<col width="100">
<col width="100">
<col width="100">
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr><td colspan="9" rowspan="1" data-sheets-value='{"1":2,"2":"Stock lending process"}'>Stock lending process</td></tr>
<tr>
<td colspan="1" rowspan="5" style="text-align: center;" data-sheets-value='{"1":2,"2":"Retail lender"}'><div><strong>Retail lender</strong></div></td>
<td colspan="1" rowspan="5" style="text-align: center;" data-sheets-value='{"1":2,"2":"←\nOffer stock loan\n\n→\nProvide stocks as collateral"}'><div>←<br>Offer stock loan<br><br>→<br>Provide stocks as collateral</div></td>
<td colspan="1" rowspan="5" style="text-align: center;" data-sheets-value='{"1":2,"2":"Brokerage A"}'><div>Brokerage A</div></td>
<td colspan="1" rowspan="5" style="text-align: center;" data-sheets-value='{"1":2,"2":"←\nOffer stock loan\n\n→\nProvide stocks as collateral"}'><div>←<br>Offer stock loan<br><br>→<br>Provide stocks as collateral</div></td>
<td colspan="1" rowspan="5" style="text-align: center;" data-sheets-value='{"1":2,"2":"KSFC\n(Lending stock pool)"}'><div>
<strong>The KSFC</strong><br><strong>(Lending stock pool)</strong>
</div></td>
<td colspan="1" rowspan="5" style="text-align: center;" data-sheets-value='{"1":2,"2":"←\nGive cash as collateral\n\n→\nLend stocks"}'><div>←<br>Give cash as collateral<br><br>→<br>Lend stocks</div></td>
<td colspan="1" rowspan="5" style="text-align: center;" data-sheets-value='{"1":2,"2":"Brokerage B"}'><div>Brokerage B</div></td>
<td colspan="1" rowspan="5" style="text-align: center;" data-sheets-value='{"1":2,"2":"←\nGive cash as collateral\n\n→\nLend stocks"}'><div>←<br>Give cash as collateral<br><br>→<br>Lend stocks</div></td>
<td colspan="1" rowspan="5" style="text-align: center;" data-sheets-value='{"1":2,"2":"Retail borrower"}'><div><strong>Retail borrower</strong></div></td>
</tr>
<tr></tr>
<tr></tr>
<tr></tr>
<tr></tr>
<tr><td colspan="9" rowspan="1" data-sheets-value='{"1":2,"2":"Source: KRX"}'>Source: KRX</td></tr>
</tbody>
</table>

The Korea FSC announced a new stock lending service specifically designed for local retail investors.It is much broader in size and scope than the existing one.The number of participating brokerages rises from 6 to 28. The lending pool totals ₩2.4T, a substantial increase from ₩0.02T.







Stock lending service
Before
New


Number of participating brokerages
6
28


Lending size
₩20.5B
₩2,400.0B


Eligible stocks
393

Short 350 for now
(Most listed stocks later)


Source: KRX

A total of 17 local brokerages begin to offer the new service right starting May 3. The other 11 brokerages will join within the end of this year.






Participating brokerages

Before
New


NH
Starting May 3
NH


Kiwoom
Kiwoom


Shinhan
Shinhan


Daishin
Daishin


SK
SK


Yuanta
Yuanta


-
KIS


-
Hana


-
KB


-
Samsung


-
Kyobo


-
Mirae Asset


-
Cape


-
BNK


-
Sangsangin


-
Hanyang


-
BNK


-
Bookook


-
By the end of the year
e-Best


-
Eugene


-
Hi


-
Meritz


-
KTB


-
IBK


-
DB


-
Hanwha


-
Hyundai Motor


-
Shinyoung


-
Yuhwa

Source: KRX

The maximum lending period is 60 days. This is a guaranteed period. A borrower has up to 60 days of guaranteed period to keep the loaned stocks if they want.





Conditions

Max lending period
60 days


- Early repayment
Yes


Lending fee
Set by brokerages

Source: KRX

Both borrowers and lenders can request early repayment.But if a lender wants early repayment before the 60-day guaranteed period, the KSFC (Korea Securities Finance Corp) will repay out of the lending stock pool.The overall flow is quite simple. It is basically built around a stock loan structure with retail borrowers acting as a LP instead of a brokerage.The KSFC serves as an intermediary operating a lending stock pool.












Stock lending process

Retail lender
← Offer stock loan  → Provide stocks as collateral
Brokerage A
← Offer stock loan  → Provide stocks as collateral

The KSFC (Lending stock pool)

← Give cash as collateral  → Lend stocks
Brokerage B
← Give cash as collateral  → Lend stocks
Retail borrower





Source: KRX



Korea's New Retail Stock Lending Service: Flow Structure & Potential Impacts

South Korea

HLB Inc. operates cord blood banking and clinical demonstration service. The Company also produces industrial valves, and iron manufacturing machines.  The Company's subsidiaries are engaged in a wide range of businesses including manufacturing of electric field instruments, lifeboats and agent services.

Price Gauge
52-week Range	0.00 - 0.00
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HLB Inc (028300 KS)

HLB Capital Increase: Offering Terms & Trading Dynamics

This post details HLB's rights offer announced in a regulatory filing last Friday and discusses the trading dynamics that will likely unfold.

Sanghyun Park

Top 20 Best Performers in the Korean Stock Market (Week of 13 May)

This is the second weekly series on the "Top 20 Best Performers in the Korean Stock Market Adjusted for Trading Value & Mkt Cap." Starting this...

Douglas Kim

K-Stop Movement: Round 2 on August 10th - What Are the Targets?

On 1 August, Korea Stock Investors Association mentioned that it will once again pool the resources of the retail investors to target a specific...

Douglas Kim

The Rise of the K-Stop Movement: Makes Its First Real Move on HLB

The "K-Stop movement" made its first real move on HLB Inc (028300 KS) today on July 15th. Many Korean retail investors have gathered together to...

Douglas Kim

Korea's New Retail Stock Lending Service: Flow Structure & Potential Impacts

The Korea FSC announced a new retail stock lending service. This post details the flow structure and quantitatively estimates potential impacts on...

Sanghyun Park

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)