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>Chairman Kim of the FSC mentioned potential rule changes in disclosing the names of short sellers at the state audit last Thursday.</li>
<li>The first is to reveal the identity of short sellers who traded through a swap contract with a broker, which is currently exempt from the short-selling disclosure obligation.</li>
<li>The second is to disclose the identity of investors caught in illegal short-selling activities, mostly naked short-selling and wall-crossing.</li>
</ul>


Chairman Kim of the FSC mentioned potential rule changes in disclosing the names of short sellers at the state audit last Thursday.
The first is to reveal the identity of short sellers who traded through a swap contract with a broker, which is currently exempt from the short-selling disclosure obligation.
The second is to disclose the identity of investors caught in illegal short-selling activities, mostly naked short-selling and wall-crossing.


Rule Changes in Disclosing the Identities of Foreign Short Sellers in Korea

<ul>
<li>The KRX will list 20 new single stock futures (SSF) and 5 single stock options (SSO) next Monday, July 25, including <strong><a href="https://www.smartkarma.com/entities/lg-energy-solution" target="_blank" data-smartkarma-citation="entities:33464:1" rel="noopener">LG Energy Solution (373220 KS)</a></strong>.</li>
<li>It seems very probable that the replacement demand for futures (short) will increase substantially due to a possible saturation of the loan market.</li>
<li>This situation, coupled with local pensions' basis trading, can lead to a significantly distorted basis. We should do basis trading or play pair trading (with LG Chem) on this.</li>
</ul>


The KRX will list 20 new single stock futures (SSF) and 5 single stock options (SSO) next Monday, July 25, including LG Energy Solution (373220 KS).
It seems very probable that the replacement demand for futures (short) will increase substantially due to a possible saturation of the loan market.
This situation, coupled with local pensions' basis trading, can lead to a significantly distorted basis. We should do basis trading or play pair trading (with LG Chem) on this.


Korea's New SSF/SSO Listing on July 25 & LG Energy's Massive Lockup Release on July 27

<ul>
<li>The KAL event is almost over. But we still have Asiana Airlines. The KDB's Asiana CB conversion should also be considered a foregone conclusion.</li>
<li>Applying the case of KAL, the KDB will likely file conversion when 30 days have elapsed since receiving the repayment notice. For this, the prevailing local consensus is June 10.</li>
<li>Conversion filing on July 8 and listing on July 29 with the 15-day delay rule applied is a likely scenario. Hence, our entry point should be from July 4.</li>
</ul>


The KAL event is almost over. But we still have Asiana Airlines. The KDB's Asiana CB conversion should also be considered a foregone conclusion.
Applying the case of KAL, the KDB will likely file conversion when 30 days have elapsed since receiving the repayment notice. For this, the prevailing local consensus is June 10.
Conversion filing on July 8 and listing on July 29 with the 15-day delay rule applied is a likely scenario. Hence, our entry point should be from July 4.


HMM-Like Dilution Event: Korean Air Is Nearly Done, But Asiana Airlines Gearing Up

<ul>
<li>Korean Air might have already notified the creditors of its early repayment decision. Asiana will likely follow suit, immediately triggering the creditors to exercise the conversion rights.</li>
<li>So, both Korean Air and Asiana's conversion should be a foregone conclusion. There is only uncertainty about how many conversions we will actually see for Asiana from the KDB.</li>
<li>Instead of preemptive position setup at this point, I would consider starting the position build-up within the 2-3 day window from the repayment filing to CB conversion.</li>
</ul>


Korean Air might have already notified the creditors of its early repayment decision. Asiana will likely follow suit, immediately triggering the creditors to exercise the conversion rights.
So, both Korean Air and Asiana's conversion should be a foregone conclusion. There is only uncertainty about how many conversions we will actually see for Asiana from the KDB.
Instead of preemptive position setup at this point, I would consider starting the position build-up within the 2-3 day window from the repayment filing to CB conversion.


Korean Air & Asiana Airlines: Current Status of CB Conversion Event

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)

South Korea

HMM Co., Ltd. provides marine transportation services.  The Company commands different types of vessels including full container vessels, oil tankers, car carriers, LNG carriers, bulk carriers, and tramps.

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HMM Co., Ltd. (011200 KS)

Rule Changes in Disclosing the Identities of Foreign Short Sellers in Korea

This post explains what FSC Chairman Kim meant by potential rule changes in the short seller identity disclosure, which he mentioned at the state...

Sanghyun Park

Korea's New SSF/SSO Listing on July 25 & LG Energy's Massive Lockup Release on July 27

This post details Korea's new SSF/SSO listing on July 25 and investigates potential basis & pair trading opportunities on LG Energy Solution amid...

Sanghyun Park

HMM-Like Dilution Event: Korean Air Is Nearly Done, But Asiana Airlines Gearing Up

This post discusses a likely schedule of Asiana Airlines' CB conversion event, which allows us to capture a trading entry point for an HMM-like...

Sanghyun Park

Korean Air & Asiana Airlines: Current Status of CB Conversion Event

This post investigates the current status of Korean Air and Asiana Airlines' CB conversion event by the creditors: the KDB and the Korea EXIM.

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

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