Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

<ul>
<li>The equity linked securities (ELS) losses related to Hang Seng China Enterprises Index (HSCEI INDEX) could lower dividend expectations for Korean banks in 2024. </li>
<li>On average, if H-Index declines below 5,699, then the majority of the investors on these H-Index could start to incur major losses starting 1Q 2024. </li>
<li>Amid challenges of lower interest rates expectations and higher losses from ELS products, major Korean banks could be more hesitant on share buybacks and increasing their dividends in 1H 2024.</li>
</ul>


The equity linked securities (ELS) losses related to Hang Seng China Enterprises Index (HSCEI INDEX) could lower dividend expectations for Korean banks in 2024. 
On average, if H-Index declines below 5,699, then the majority of the investors on these H-Index could start to incur major losses starting 1Q 2024. 
Amid challenges of lower interest rates expectations and higher losses from ELS products, major Korean banks could be more hesitant on share buybacks and increasing their dividends in 1H 2024.


ELS Losses for HSCEI Index Could Result in Lowering Dividend Expectations for Korean Banks in 2024

<ul>
<li>The FSS has launched a formal investigation into KB Kookmin bank due to potentially massive losses related to the HSCEI linked ELS products. </li>
<li>The three major listed banking groups (KB Financial, Shinhan Financial, and Hana Financial) could be burdened with nearly 86% of the HSCEI linked ELS losses (close to 2.6 trillion won). </li>
<li>Major Korean banks may need a <em>"Hail Mary"</em> pass to avoid this disaster. Such positive outlook would include sharply rising HSCEI index in 2024, similar to what happened in 2016. </li>
</ul>


The FSS has launched a formal investigation into KB Kookmin bank due to potentially massive losses related to the HSCEI linked ELS products. 
The three major listed banking groups (KB Financial, Shinhan Financial, and Hana Financial) could be burdened with nearly 86% of the HSCEI linked ELS losses (close to 2.6 trillion won). 
Major Korean banks may need a "Hail Mary" pass to avoid this disaster. Such positive outlook would include sharply rising HSCEI index in 2024, similar to what happened in 2016. 


ELS Losses Related to Hong Kong H-Index Could Top Nearly 3 Trillion Won for Major Korean Banks in 2024

Douglas Research Advisory

Cross Asset Strategy

<ul>
<li>There are some major surprises (both inclusions and exclusions) in the Korea Value Up index. </li>
<li>In particular, the telecom sector (SK Telecom and KT) and large cap holding companies (Samsung C&amp;T and LG Corp) are surprising exclusions in the index.</li>
<li>There are many surprising inclusions in the Korea Value Up Index. We provide 30 companies are surprising inclusions in the Korea Value Up Index (19 KOSDAQ and 11 KOSPI listed).</li>
</ul>


There are some major surprises (both inclusions and exclusions) in the Korea Value Up index. 
In particular, the telecom sector (SK Telecom and KT) and large cap holding companies (Samsung C&amp;T and LG Corp) are surprising exclusions in the index.
There are many surprising inclusions in the Korea Value Up Index. We provide 30 companies are surprising inclusions in the Korea Value Up Index (19 KOSDAQ and 11 KOSPI listed).


Korea Value Up Index - Surprising Inclusions and Exclusions

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 index focuses on qualitative factors like capital efficiency and shareholder returns, but efforts to impose sector balance may have overextended its market benchmark role.</li>
<li>Some companies not fitting the 'value-up' narrative got included, while market favorites were sidelined by sector rankings, which is puzzling given the index's original goal.</li>
<li>Still, with rebalancing cut down to once a year, we should expect the flow impact on the index names to hit harder than initially thought compared to their sector peers.</li>
</ul>


The index focuses on qualitative factors like capital efficiency and shareholder returns, but efforts to impose sector balance may have overextended its market benchmark role.
Some companies not fitting the 'value-up' narrative got included, while market favorites were sidelined by sector rankings, which is puzzling given the index's original goal.
Still, with rebalancing cut down to once a year, we should expect the flow impact on the index names to hit harder than initially thought compared to their sector peers.


All the Scoop on the Korea Value-Up Index

<ul>
<li>Korea Value-Up index is finally expected to be launched in September 2024 which is likely to include at least 100 companies in KOSPI and KOSDAQ.</li>
<li>There are expectations that Korea's Value Up index could resemble JPX Prime 150 index which is a Japanese version of the value up index launched last year.</li>
<li>We provide 70 stocks in Korea that could be included in the Korea Value Up index. These 70 stocks could outperform the market in the next several months.</li>
</ul>


Korea Value-Up index is finally expected to be launched in September 2024 which is likely to include at least 100 companies in KOSPI and KOSDAQ.
There are expectations that Korea's Value Up index could resemble JPX Prime 150 index which is a Japanese version of the value up index launched last year.
We provide 70 stocks in Korea that could be included in the Korea Value Up index. These 70 stocks could outperform the market in the next several months.


Launch of Korea Value Up Index in September

South Korea

KB Financial Group Inc. (the "Company"), in accordance with Financial Holding Companies Act, was established on September 29, 2008, through stock transfer with the former shareholders of its subsidiaries including Kookmin Bank in order to provide management services and financing to associated companies. The headquarters are located at Seoul, Korea

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KB Financial ADR (KB US)

ELS Losses for HSCEI Index Could Result in Lowering Dividend Expectations for Korean Banks in 2024

The equity linked securities (ELS) losses related to Hang Seng China Enterprises Index (HSCEI INDEX) could lower dividend expectations for Korean...

Douglas Kim

Korea Value Up Index - Surprising Inclusions and Exclusions

There are many surprising inclusions and exclusions in the Korea Value Up Index. We provide 30 companies that are surprising inclusions and 10...

Douglas Kim

All the Scoop on the Korea Value-Up Index

This post breaks down everything we need to know about the Korea Value-up Index that KRX just unveiled today, especially focusing on those...

Sanghyun Park

Launch of Korea Value Up Index in September

Korea Value-Up index is finally expected to be launched in September 2024 which is likely to include at least 100 companies in KOSPI and KOSDAQ.

Douglas Kim

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)