Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Event-Driven

<ul>
<li>On 2 January, Align Partners Capital Management (APCM) started to go activist on seven leading Korean banking group companies.</li>
<li>According to APCM, the major Korean banking groups could pay out at least half of their net income to their shareholders, which would be more than double the current levels.</li>
<li>Korean banks are trading at deep discount to global peers, now trading at PBR of 0.2~0.4x whereas global peers trade at 1.3x. </li>
</ul>


On 2 January, Align Partners Capital Management (APCM) started to go activist on seven leading Korean banking group companies.
According to APCM, the major Korean banking groups could pay out at least half of their net income to their shareholders, which would be more than double the current levels.
Korean banks are trading at deep discount to global peers, now trading at PBR of 0.2~0.4x whereas global peers trade at 1.3x. 


Align Partners Goes Activist on Seven Banking Group Companies in Korea

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>A third of the way through the review period, we see three potential changes. There are a few stocks that are close to inclusion and could lead to more changes.</li>
<li>There should be a couple of index changes prior to the June review due to the merger of <a href="https://www.smartkarma.com/entities/meritz-financial-group-inc" target="_blank" data-smartkarma-citation="entities:11776:1" rel="noopener">Meritz Financial Group</a>, <a href="https://www.smartkarma.com/entities/meritz-securities-co-ltd" target="_blank" data-smartkarma-citation="entities:19692:1" rel="noopener">Meritz Securities</a> and <a href="https://www.smartkarma.com/entities/meritz-fire-marine-insurance-co-ltd" target="_blank" data-smartkarma-citation="entities:20468:1" rel="noopener">Meritz Fire &amp; Marine Insurance</a>.</li>
<li>Passive trackers need to trade between KRW 5-23bn on the stocks and short interest is quite low on the potential inclusions and exclusions.</li>
</ul>


A third of the way through the review period, we see three potential changes. There are a few stocks that are close to inclusion and could lead to more changes.
There should be a couple of index changes prior to the June review due to the merger of Meritz Financial Group, Meritz Securities and Meritz Fire &amp; Marine Insurance.
Passive trackers need to trade between KRW 5-23bn on the stocks and short interest is quite low on the potential inclusions and exclusions.


KOSPI200 Index Rebalance Preview (June): Changes from Now to June

Equity Bottom-Up

<ul>
<li>There are four major reasons why we like JB Financial Group.</li>
<li>They include highest ROE among peers, highest dividend yield among peers, potential inclusion in KOSPI200 in 2023, and continued pressure by Align Partners to improve corporate governance.</li>
<li>One of the key risk factors of the company is that it is not a nationwide banking group but most of its operations are in the southwestern portion of Korea.</li>
</ul>


There are four major reasons why we like JB Financial Group.
They include highest ROE among peers, highest dividend yield among peers, potential inclusion in KOSPI200 in 2023, and continued pressure by Align Partners to improve corporate governance.
One of the key risk factors of the company is that it is not a nationwide banking group but most of its operations are in the southwestern portion of Korea.


JB Financial Group: Four Key Investment Merits

<ul>
<li>Meritz Financial Group's decision to delist Meritz Fire &amp; Marine Insurance and Meritz Securities in 1H 2023 will result in at least two new additions to KOSPI 200.</li>
<li>We highlight five companies which could be potential additions to KOSPI 200 in 1H 2023.</li>
<li>Five potential additions to KOSPI 200 in 1H 2023 include Jb Financial Group, Hyundai Construction Equipment, Dentium, Samyang Foods, and Lotte Rental. </li>
</ul>


Meritz Financial Group's decision to delist Meritz Fire &amp; Marine Insurance and Meritz Securities in 1H 2023 will result in at least two new additions to KOSPI 200.
We highlight five companies which could be potential additions to KOSPI 200 in 1H 2023.
Five potential additions to KOSPI 200 in 1H 2023 include Jb Financial Group, Hyundai Construction Equipment, Dentium, Samyang Foods, and Lotte Rental. 


KOSPI 200 Rebalance in 1H 2023 - Five Potential Additions Post Deletions of Meritz Affiliates

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.

<ul>
<li>The index targets the GICS Financials/Banks sector stocks: 12 stocks belong to this sector. Then nine of these are currently included in the KRX Banks.</li>
<li>Compared to the last rebalancing, where we had Kakao Bank's inclusion event, the impact size for the upcoming rebalancing will likely be significantly reduced.</li>
<li>The last rebalancing showed that the directional correlation between passive flow and price movement was high. So, we can still consider a Long/Short Day Trade even with this impact size.</li>
</ul>


The index targets the GICS Financials/Banks sector stocks: 12 stocks belong to this sector. Then nine of these are currently included in the KRX Banks.
Compared to the last rebalancing, where we had Kakao Bank's inclusion event, the impact size for the upcoming rebalancing will likely be significantly reduced.
The last rebalancing showed that the directional correlation between passive flow and price movement was high. So, we can still consider a Long/Short Day Trade even with this impact size.


KRX Banks Index (KODEX ETF): September Rebalancing Preview

South Korea

JB Financial Group Co. Ltd., a holding company, provides a full range of consumer and commercial banking-related financial services.

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Jb Financial Group (175330 KS)

Align Partners Goes Activist on Seven Banking Group Companies in Korea

On 2 January, Align Partners Capital Management (APCM) started to go activist on seven leading Korean banking group companies.

Douglas Kim

KOSPI200 Index Rebalance Preview (June): Changes from Now to June

There could be two changes in Jan & April and then another 3 changes in June. Impact on the stocks is not excessive and short interest is minimal....

Brian Freitas

JB Financial Group: Four Key Investment Merits

The key investment merits of JB Financial Group include highest ROE and dividend yield among peers as well as potential inclusion in KOSPI200 in 2023.

Douglas Kim

KOSPI 200 Rebalance in 1H 2023 - Five Potential Additions Post Deletions of Meritz Affiliates

In this insight, we discuss potential additions to KOSPI 200 post likely deletions of Meritz F&M Insurance and Meritz Securities from KOSPI 200 in...

Douglas Kim

KRX Banks Index (KODEX ETF): September Rebalancing Preview

This post previews the upcoming rebalancing of the KRX Banks Index, one of the KRX-owned thematic indexes with a meaningful AUM despite a small...

Sanghyun Park

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