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 local regulators will likely announce a full resumption of short selling within this month, and it will likely be implemented either next month or at the latest within April.</li>
<li>Immediate candidates filtering on KOSPI (outside KOSPI 200): Huchems Fine Chemical, Hana Tour, Samyang Foods, and Douzone Bizon.</li>
<li>Immediate candidates filtering on KOSDAQ (outside KOSDAQ 150): UniTest and Kolon Life Science.</li>
</ul>


The local regulators will likely announce a full resumption of short selling within this month, and it will likely be implemented either next month or at the latest within April.
Immediate candidates filtering on KOSPI (outside KOSPI 200): Huchems Fine Chemical, Hana Tour, Samyang Foods, and Douzone Bizon.
Immediate candidates filtering on KOSDAQ (outside KOSDAQ 150): UniTest and Kolon Life Science.


Short Selling Full Resumption Schedule & Immediate Candidates Filtering

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

The Korea Exchange (KRX) will announce the results of the December 2021 review of 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> in November. The constituent changes will be effective after the close of trading on 9 December.There could be a change at the September futures expiry with <a href="https://www.smartkarma.com/entities/sd-biosensor-inc" target="_blank" data-smartkarma-citation="entities:33333:1" rel="noopener">SD Biosensor (SDBIOZ KS)</a> getting Fast Entry into the index. We see <a href="https://www.smartkarma.com/entities/lock-lock-co-ltd" target="_blank" data-smartkarma-citation="entities:4739:1" rel="noopener">Lock&amp;Lock (115390 KS)</a> as a potential deletion to make way for <a href="https://www.smartkarma.com/entities/sd-biosensor-inc" target="_blank" data-smartkarma-citation="entities:33333:1" rel="noopener">SD Biosensor (SDBIOZ KS)</a>. At the current time, we see 3 potential changes at the regular review in December with F&amp;F Co (383220 KS), <a href="https://www.smartkarma.com/entities/sl-corp" target="_blank" data-smartkarma-citation="entities:20694:1" rel="noopener">Sl Corp (005850 KS)</a> and <a href="https://www.smartkarma.com/entities/seah-besteel-corp" target="_blank" data-smartkarma-citation="entities:11760:1" rel="noopener">Seah Besteel (001430 KS)</a> replacing <a href="https://www.smartkarma.com/entities/samyang-foods-co-ltd" target="_blank" data-smartkarma-citation="entities:9100:1" rel="noopener">Samyang Foods (003230 KS)</a>, <a href="https://www.smartkarma.com/entities/f-f-co-ltd" target="_blank" data-smartkarma-citation="entities:15983:1" rel="noopener">F&amp;F Co Ltd (007700 KS)</a> and <a href="https://www.smartkarma.com/entities/jw-pharmaceutical-corp" target="_blank" data-smartkarma-citation="entities:18784:1" rel="noopener">Jw Pharmaceutical (001060 KS)</a>. These names could change over the next few months and their prices (and the prices of the other stocks) move around.After the 100%+ returns in 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> June review by buying the inclusions and selling the exclusions (or the KOSPI2 index futures), there will be a lot of interest in the December review.In this Insight we look at the KOSPI 200 index methodology, the historical performance of inclusions vs exclusions, at potential candidates for inclusion/exclusion in this review and some of the details around the names.

The Korea Exchange (KRX) will announce the results of the December 2021 review of the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) in November. The constituent changes will be effective after the close of trading on 9 December.There could be a change at the September futures expiry with SD Biosensor (SDBIOZ KS) getting Fast Entry into the index. We see Lock&amp;Lock (115390 KS) as a potential deletion to make way for SD Biosensor (SDBIOZ KS). At the current time, we see 3 potential changes at the regular review in December with F&amp;F Co (383220 KS), Sl Corp (005850 KS) and Seah Besteel (001430 KS) replacing Samyang Foods (003230 KS), F&amp;F Co Ltd (007700 KS) and Jw Pharmaceutical (001060 KS). These names could change over the next few months and their prices (and the prices of the other stocks) move around.After the 100%+ returns in the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) June review by buying the inclusions and selling the exclusions (or the KOSPI2 index futures), there will be a lot of interest in the December review.In this Insight we look at the KOSPI 200 index methodology, the historical performance of inclusions vs exclusions, at potential candidates for inclusion/exclusion in this review and some of the details around the names.

KOSPI200 Index Rebalance Preview: Focus Shifts to December After a Fantastic June Review

Equity Analyst focused on Korea Stock Market

Thomas Yi

Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/1726" target="_blank" data-smartkarma-citation="entities:1726:1">Huchems Fine Chemical (069260 KS)</a>, one of the largest basic chemicals company in Korea has suffered from share price plunge during last 2 months, due to the market’s concerns over earnings deterioration. Especially, due to large size TDI capacity expansion in 4Q18, investors concern over the TDI-Toluene spread, which impacts on the company’s earnings. However, the spread impact on the earnings is less than 30% of total earnings. And we believe the spread trend should be milder than expected, considering an old TDI plant shutdown (estimated 80,000 tonne/year) in 2019, significantly declined TDI inventory level, and required period for the first start-up. The company’s share price has plummeted enough to near historical trough, and offers now higher than 6% of dividend yield. While the company may not be the best stock, we believe it is a good one for long-term investor’s portfolio.<ul><li>
Stock Information (2018/ 9/ 20) Share price: KRW 23,950/ Market Cap: KRW 979bn, Trading Volume (@60 days): 111,885 shares, Historical price (52 weeks: Highest/Lowest) KRW 32,700/KRW 22,600, Absolute Return (3 month) -15.96%, Major shareholders: Taekwang Ind and others 43.5%/ National Pension Service (NPS) 10.2%/ Nonghyup Agribusiness 8.3%/ Treasury stock 0.5%
</li></ul>

Huchems Fine Chemical (069260 KS), one of the largest basic chemicals company in Korea has suffered from share price plunge during last 2 months, due to the market’s concerns over earnings deterioration. Especially, due to large size TDI capacity expansion in 4Q18, investors concern over the TDI-Toluene spread, which impacts on the company’s earnings. However, the spread impact on the earnings is less than 30% of total earnings. And we believe the spread trend should be milder than expected, considering an old TDI plant shutdown (estimated 80,000 tonne/year) in 2019, significantly declined TDI inventory level, and required period for the first start-up. The company’s share price has plummeted enough to near historical trough, and offers now higher than 6% of dividend yield. While the company may not be the best stock, we believe it is a good one for long-term investor’s portfolio.
Stock Information (2018/ 9/ 20) Share price: KRW 23,950/ Market Cap: KRW 979bn, Trading Volume (@60 days): 111,885 shares, Historical price (52 weeks: Highest/Lowest) KRW 32,700/KRW 22,600, Absolute Return (3 month) -15.96%, Major shareholders: Taekwang Ind and others 43.5%/ National Pension Service (NPS) 10.2%/ Nonghyup Agribusiness 8.3%/ Treasury stock 0.5%


Huchems (069260 KS) “Shares near Trough and Offer High Dividend”

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

Price and relative strength trends continue to improve for our international equal-weight Health Care Sector. We recommend adding exposure, and provide charts on numerous actionable stocks across global markets. We also highlight actionable stocks within Materials, beyond metals &amp; mining stocks, that are outperforming.

Price and relative strength trends continue to improve for our international equal-weight Health Care Sector. We recommend adding exposure, and provide charts on numerous actionable stocks across global markets. We also highlight actionable stocks within Materials, beyond metals &amp; mining stocks, that are outperforming. 

Global Strategy: Opportunities in Health Care & Materials Stocks

Thematic (Sector/Industry)

Don't forget that this year's ex-dividend date for the Korean companies whose fiscal year ends Dec 31 is Dec 27. This means you have to own (or buy) shares until Dec 26 (next Tuesday) to get dividends. Yes, this means it is again time to make a move on dividend arbitrage. Buy them in baskets and short the futures? Surely, we have various ways of doing arbitrage on high yield dividend stocks, but in this insight I will just take a look at individual stocks and I will leave specifics of arbitrage strategy up to you. That is, I will try to examine the most basic thing, price-dividend yield of each individual stock that I think worth our attention, and then compare it with the opening price of each individual stock on the ex-dividend day.<table class="table table-striped"><tbody><tr><td colspan="2" style="width: 731px;">Important dates for high yield dividend stock hunters in Korea for the companies whose FY ends Dec 31</td></tr><tr><td style="width: 403.7364196777344px;">Last day to buy high yield dividend stocks in 2017</td><td style="text-align: right; width: 327.2635803222656px;">Dec 26, 2017</td></tr><tr><td style="width: 403.7364196777344px;">Ex-dividend date in 2017</td><td style="text-align: right; width: 327.2635803222656px;">Dec 27, 2017</td></tr><tr><td colspan="2" style="text-align: right; width: 731px;"><hr></td></tr><tr><td style="width: 403.7364196777344px;">Last day to buy high yield dividend stocks in 2016</td><td style="text-align: right; width: 327.2635803222656px;">Dec 27, 2016</td></tr><tr><td style="width: 403.7364196777344px;">Ex-dividend date in 2016</td><td style="text-align: right; width: 327.2635803222656px;">Dec 28, 2016</td></tr><tr><td colspan="2" style="width: 731px;">Source: KRX</td></tr></tbody></table>

Don't forget that this year's ex-dividend date for the Korean companies whose fiscal year ends Dec 31 is Dec 27. This means you have to own (or buy) shares until Dec 26 (next Tuesday) to get dividends. Yes, this means it is again time to make a move on dividend arbitrage. Buy them in baskets and short the futures? Surely, we have various ways of doing arbitrage on high yield dividend stocks, but in this insight I will just take a look at individual stocks and I will leave specifics of arbitrage strategy up to you. That is, I will try to examine the most basic thing, price-dividend yield of each individual stock that I think worth our attention, and then compare it with the opening price of each individual stock on the ex-dividend day.Important dates for high yield dividend stock hunters in Korea for the companies whose FY ends Dec 31Last day to buy high yield dividend stocks in 2017Dec 26, 2017Ex-dividend date in 2017Dec 27, 2017Last day to buy high yield dividend stocks in 2016Dec 27, 2016Ex-dividend date in 2016Dec 28, 2016Source: KRX

Year-End Dividend Arbitrage - 5 High Conviction Stocks in KOSPI

South Korea

Huchems Fine Chemical Corp. develops and provides fine chemical products. The main products include polyurethane, ammonium nitrate, nitric acid, and ammonia.

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Huchems Fine Chemical (069260 KS)

Short Selling Full Resumption Schedule & Immediate Candidates Filtering

The post summarizes the short-selling full resumption schedule in Korea and offers the filtering results of immediate short-selling candidates.

Sanghyun Park

KOSPI200 Index Rebalance Preview: Focus Shifts to December After a Fantastic June Review

We see 1 potential change in September and 3 potential changes at the KOSPI200 December review. Post the excellent returns at the June rebalance,...

Brian Freitas

Huchems (069260 KS) “Shares near Trough and Offer High Dividend”

Huchems Fine Chemical (069260 KS), one of the largest basic chemicals company in Korea has suffered from share price plunge during last 2 months,...

Thomas Yi

Global Strategy: Opportunities in Health Care & Materials Stocks

Price and relative strength trends continue to improve for our international equal-weight Health Care Sector.We recommend adding exposure, and...

Vermilion Research

Year-End Dividend Arbitrage - 5 High Conviction Stocks in KOSPI

Don't forget that this year's ex-dividend date for the Korean companies whose fiscal year ends Dec 31 is Dec 27. This means you have to own (or...

Sanghyun Park

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