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

FnGuide, which started as an index operator in 2006, announced that the total net assets of ETFs managed based on its indexes have exceeded 12 trillion won.<div class="content-highlight">It is about 17.3% of the total net assets of 63.6 trillion won in the local ETF market at the end of September. Currently, 110 ETFs are tracking the FnGuide indexes.</div>Among the ETFs that track the FnGuide index, the products with the highest AUMs are as follows.<table class="table table-striped">
<colgroup>
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<tbody>
<tr><td colspan="5" data-sheets-value='{"1":2,"2":"Index summary"}'>Index summary</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Index name"}'>Index name</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"FnGuide Samsung Group"}'>FnGuide Samsung Group</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"FnGuide TOP10"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'>FnGuide TOP10</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"FnGuide Secondary Battery"}'>FnGuide Secondary Battery</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Wise Secondary Cell"}'>Wise Secondary Cell</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"ETF"}'>ETF</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Samsung Kodex Samsung Group ETF"}' data-sheets-formula='=googlefinance(R[1]C[0], "name")'>Samsung KODEX Samsung Group ETF</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Mirae Asset TIGER Top 10 ETF"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}' data-sheets-formula='=googlefinance(R[1]C[0], "name")'>Mirae Asset TIGER Top 10 ETF</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Samsung KODEX Secondary Battery Industry ETF"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}' data-sheets-formula='=googlefinance(R[1]C[0], "name")'>Samsung KODEX Secondary Battery Industry ETF</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Mirae Asset TIGER Secondary Cell ETF"}' data-sheets-formula='=googlefinance(R[1]C[0], "name")'>Mirae Asset TIGER Secondary Cell ETF</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Ticker"}'>Ticker</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"102780"}' data-sheets-formula='="102780"'>102780</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"292150"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}' data-sheets-formula='="292150"'>292150</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"305720"}' data-sheets-formula='="305720"'>305720</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"305540"}' data-sheets-formula='="305540"'>305540</td>
</tr>
<tr><td colspan="5" style="text-align: right;"></td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"AUM"}'>AUM</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1.785784}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.00T"}' data-sheets-formula="=R[1]C[0]*R[2]C[0]/1000000000000">₩1.79T</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1.274539}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.00T"}' data-sheets-formula="=(R[1]C[0]*R[2]C[0]/1000000000000)">₩1.27T</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1.1917875}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.00T"}' data-sheets-formula="=R[1]C[0]*R[2]C[0]/1000000000000">₩1.19T</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1.191006}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B","3":1}' data-sheets-formula="=R[1]C[0]*R[2]C[0]/1000000000000">₩1.19T</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Price"}'>Price</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":10010}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0","3":1}' data-sheets-formula='=googlefinance(R[-2]C[0], "price")'>₩10,010</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":13690}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0","3":1}' data-sheets-formula='=googlefinance(R[-2]C[0], "price")'>₩13,690</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":22875}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0","3":1}' data-sheets-formula='=googlefinance(R[-2]C[0], "price")'>₩22,875</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":22860}' data-sheets-numberformat='{"1":4,"2":"[$₩]#,##0","3":1}' data-sheets-formula='=googlefinance(R[-2]C[0], "price")'>₩22,860</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"SO"}'>SO</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":178400000}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>178,400,000</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":93100000}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>93,100,000</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":52100000}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>52,100,000</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":52100000}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>52,100,000</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Number of constituents"}'>Number of constituents</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":15}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>15</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":10}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>10</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":25}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}'>25</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":26}' data-sheets-numberformat='{"1":2,"2":"#,##0"}'>26</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Weight type"}'>Weight type</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Float-adjusted market cap"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'>Float-adjusted market cap</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Float-adjusted market cap"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'>Float-adjusted market cap</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Keyword-based scoring &amp; float-adjusted market cap"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'>Keyword-based scoring &amp; float-adjusted market cap</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Float-adjusted market cap"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'>Float-adjusted market cap</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Cap"}'>Cap</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.25}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>25.00%</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.25}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>25.00%</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"20.00% for the largest full market cap constituent and 15.00% for the remaining"}'>20.00% for the largest full market cap constituent and 15.00% for the remaining</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.1}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>10.00%</td>
</tr>
<tr><td colspan="5"></td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Fast entry"}'>Fast-entry</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Yes (a minimum holding period of 30 days)"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'>Yes (a minimum holding period of 30 days)</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"N/A"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'>N/A</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Yes (a minimum holding period of 30 days)"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'>Yes (a minimum holding period of 30 days)</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Yes (a minimum holding period of 30 days)"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'>Yes (a minimum holding period of 30 days)</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Rebalancing cycle"}'>Rebalancing cycle</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Semi-annually"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'>Semi-annually</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Semi-annually"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'>Semi-annually</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Semi-annually"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'>Semi-annually</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Quarterly"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'>Quarterly</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Rebalancing month"}'>Rebalancing month</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"June and December"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'>June and December</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"June and December"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'>June and December</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"June and December"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'>June and December</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"January, April, July, and October"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'>January, April, July, and October</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Announcement date"}'>Announcement date</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Only ETF operator is notified"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'>Only ETF operator is notified</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Only ETF operators are notified."}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'>Only ETF operators are notified.</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Only ETF operator is notified"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'>Only ETF operator is notified</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Only ETF operator is notified"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'>Only ETF operator is notified</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Implementation date"}'>Implementation date</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"2nd business day in June and December"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'>2nd business day in June and December 1</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"The first trading day of the week following the last trading day for KOSPI 200 futures contracts"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'> trading day of the week following the last trading day for KOSPI 200 futures contracts</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"The first trading day of the week following the last trading day for KOSPI 200 futures contracts"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'>The first trading day of the week following the last trading day for KOSPI 200 futures contracts</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"The trading day following the option expiration dates"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'>The trading day following the option expiration dates</td>
</tr>
<tr><td colspan="5"></td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Next implementation date"}'>Next implementation date</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"December 2, 2021"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'>December 2, 2021</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"December 10, 2021"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'>December 10, 2021</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"December 10, 2021"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'>December 10, 2021</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"January 13, 2022"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'>January 13, 2022</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Rebalancing trading"}'>Rebalancing trading</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"At the close on December 1, 2021"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'>At the close on December 1, 2021</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"At the close on December 9, 2021"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'>At the close on December 9, 2021</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"At the close on December 9, 2021"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'>At the close on December 9, 2021</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"At the close on January 14, 2022"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'>At the close on January 14, 2022</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Screening base date"}'>Screening base date</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"The last trading day of the month preceding the date of regular rebalancing"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'>The last trading day of the month preceding the date of regular rebalancing</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"The last trading day of the month preceding the date of regular rebalancing"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'>The last trading day of the month preceding the date of regular rebalancing</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"The last trading day of the month preceding the date of regular rebalancing"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'>The last trading day of the month preceding the date of regular rebalancing</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"The last trading day of the month preceding the date of regular rebalancing"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'>The last trading day of the month preceding the date of regular rebalancing</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Screening period"}'>Screening period</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"The three months preceding the screening base date"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'>The three months preceding the screening base date</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"The three months preceding the screening base date"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'>The three months preceding the screening base date</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"The three months preceding the screening base date"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'>The three months preceding the screening base date</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"The three months preceding the screening base date"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'>The three months preceding the screening base date</td>
</tr>
<tr><td colspan="5" data-sheets-value='{"1":2,"2":"Source: KRX &amp; TIGER ETF"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}' data-sheets-formula="=PDF!R[-8]C[0]">Source: KRX &amp; TIGER ETF</td></tr>
</tbody>
</table>The rebalancing of the above four indexes is worth following in terms of AUM size. In particular, TIGER Top 10, whose rebalancing is early December, is likely to experience notable rebalancing trading. On the other hand, since KODEX Secondary Battery uses a keyword-based scoring system, it is not easy to predict the weight change. TIGER Secondary Cell will be rebalancing in January next year.As for KODEX Samsung Group, it is also an interesting one, but given its rebalancing implementation rule (to be done over five trading days), the passive impact resulting from rebalancing should be pretty limited. KODEX Samsung Group completes rebalancing from the 2nd trading day to the 6th trading day in June and December. The review base date is the last trading day of the month immediately preceding the rebalancing.

FnGuide, which started as an index operator in 2006, announced that the total net assets of ETFs managed based on its indexes have exceeded 12 trillion won.It is about 17.3% of the total net assets of 63.6 trillion won in the local ETF market at the end of September. Currently, 110 ETFs are tracking the FnGuide indexes.Among the ETFs that track the FnGuide index, the products with the highest AUMs are as follows.








Index summary

Index name
FnGuide Samsung Group
FnGuide TOP10
FnGuide Secondary Battery
Wise Secondary Cell


ETF
Samsung KODEX Samsung Group ETF
Mirae Asset TIGER Top 10 ETF
Samsung KODEX Secondary Battery Industry ETF
Mirae Asset TIGER Secondary Cell ETF


Ticker
102780
292150
305720
305540



AUM
₩1.79T
₩1.27T
₩1.19T
₩1.19T


Price
₩10,010
₩13,690
₩22,875
₩22,860


SO
178,400,000
93,100,000
52,100,000
52,100,000


Number of constituents
15
10
25
26


Weight type
Float-adjusted market cap
Float-adjusted market cap
Keyword-based scoring &amp; float-adjusted market cap
Float-adjusted market cap


Cap
25.00%
25.00%
20.00% for the largest full market cap constituent and 15.00% for the remaining
10.00%



Fast-entry
Yes (a minimum holding period of 30 days)
N/A
Yes (a minimum holding period of 30 days)
Yes (a minimum holding period of 30 days)


Rebalancing cycle
Semi-annually
Semi-annually
Semi-annually
Quarterly


Rebalancing month
June and December
June and December
June and December
January, April, July, and October


Announcement date
Only ETF operator is notified
Only ETF operators are notified.
Only ETF operator is notified
Only ETF operator is notified


Implementation date
2nd business day in June and December 1
 trading day of the week following the last trading day for KOSPI 200 futures contracts
The first trading day of the week following the last trading day for KOSPI 200 futures contracts
The trading day following the option expiration dates



Next implementation date
December 2, 2021
December 10, 2021
December 10, 2021
January 13, 2022


Rebalancing trading
At the close on December 1, 2021
At the close on December 9, 2021
At the close on December 9, 2021
At the close on January 14, 2022


Screening base date
The last trading day of the month preceding the date of regular rebalancing
The last trading day of the month preceding the date of regular rebalancing
The last trading day of the month preceding the date of regular rebalancing
The last trading day of the month preceding the date of regular rebalancing


Screening period
The three months preceding the screening base date
The three months preceding the screening base date
The three months preceding the screening base date
The three months preceding the screening base date

Source: KRX &amp; TIGER ETF

The rebalancing of the above four indexes is worth following in terms of AUM size. In particular, TIGER Top 10, whose rebalancing is early December, is likely to experience notable rebalancing trading. On the other hand, since KODEX Secondary Battery uses a keyword-based scoring system, it is not easy to predict the weight change. TIGER Secondary Cell will be rebalancing in January next year.As for KODEX Samsung Group, it is also an interesting one, but given its rebalancing implementation rule (to be done over five trading days), the passive impact resulting from rebalancing should be pretty limited. KODEX Samsung Group completes rebalancing from the 2nd trading day to the 6th trading day in June and December. The review base date is the last trading day of the month immediately preceding the rebalancing.

FnGuide Top 10 December Rebalancing: Watch KB Financial (Add) & POSCO (Delete)

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

In this insight, we discuss the end of the one month lock up period and more block selling ahead by major investors for KakaoBank in the months ahead. The one month lock up period will end on 6 September for KakaoBank and some institutional investors may try to take some profits. There are 3.14 million shares that will no longer be under the lock up period for KakaoBank starting 6 September, which represents 0.7% outstanding shares.In addition, among the three largest shareholders of KakaoBank, we believe that there is an increasing probability of Korea Investment Asset Mgmt and KB Bank trying to unload partial stakes in KakaoBank once the 6 months lock-up period is over.

In this insight, we discuss the end of the one month lock up period and more block selling ahead by major investors for KakaoBank in the months ahead. The one month lock up period will end on 6 September for KakaoBank and some institutional investors may try to take some profits. There are 3.14 million shares that will no longer be under the lock up period for KakaoBank starting 6 September, which represents 0.7% outstanding shares.In addition, among the three largest shareholders of KakaoBank, we believe that there is an increasing probability of Korea Investment Asset Mgmt and KB Bank trying to unload partial stakes in KakaoBank once the 6 months lock-up period is over. 

KakaoBank - End of the 1 Month Lock Up Period & More Block Selling Ahead Likely by Major Investors

Global Bank Equity Specialist, Creative Portfolios

Paul Hollingworth

Global Bank Equity Specialist

Creative Portfolios

Equity Bottom-Up

KB Financial combines a diversified operational profile (with increasing non-banking revenue streams), robust fundamental trends, with a low valuation and benign capital return potential.Results are encouraging given the low-margin environment. Our PH Score™ of 8.2 shows that the bank is making headway. The top-line shows vibrant growth of (higher ROE) non-interest Income while Net Interest Income benefits from lower Funding Costs. Elsewhere, we can highlight somewhat better Efficiency, enhanced Provisioning, improved headline Asset Quality (as opposed to “reported investment of impaired Loans”) while Profitability (a key variable and management priority rather than growth) moved in the right direction. Capital Adequacy ratios are generally improved. Not so good were the compression of NIM/Spread and erosion of Liquidity: these are structurally challenging areas for the bank. With flat Credit Costs, Comprehensive Income and Net Profit still showed highly robust progression YoY. KB Financial targets a DPR to 30% in the medium term (dependent on macro certainties) versus around about 25% currently. There may be more share buybacks and treasury share cancellations going forward. With M&amp;A on the backburner, the Group will focus on integration of its existing asset base, freeing up space for dividends and share buybacks. For such a solid, diversified, franchise, with enhanced capital returns ahead, valuations appeal: a FV of 6%, a PBV of 0.49x, an Earnings Yield of 20.3%, a Dividend Yield of 3.1%, and a TRR (Total Return Ratio) of 2.4x. A PH Score™ of 8.2 is top quartile globally. According to our VFM (Valuation, Fundamentals, Valuation) model, KB Financial resides in the top decile globally, from over 2000 banks.

KB Financial combines a diversified operational profile (with increasing non-banking revenue streams), robust fundamental trends, with a low valuation and benign capital return potential.Results are encouraging given the low-margin environment. Our PH Score™ of 8.2 shows that the bank is making headway. The top-line shows vibrant growth of (higher ROE) non-interest Income while Net Interest Income benefits from lower Funding Costs. Elsewhere, we can highlight somewhat better Efficiency, enhanced Provisioning, improved headline Asset Quality (as opposed to “reported investment of impaired Loans”) while Profitability (a key variable and management priority rather than growth) moved in the right direction. Capital Adequacy ratios are generally improved. Not so good were the compression of NIM/Spread and erosion of Liquidity: these are structurally challenging areas for the bank. With flat Credit Costs, Comprehensive Income and Net Profit still showed highly robust progression YoY. KB Financial targets a DPR to 30% in the medium term (dependent on macro certainties) versus around about 25% currently. There may be more share buybacks and treasury share cancellations going forward. With M&amp;A on the backburner, the Group will focus on integration of its existing asset base, freeing up space for dividends and share buybacks. For such a solid, diversified, franchise, with enhanced capital returns ahead, valuations appeal: a FV of 6%, a PBV of 0.49x, an Earnings Yield of 20.3%, a Dividend Yield of 3.1%, and a TRR (Total Return Ratio) of 2.4x. A PH Score™ of 8.2 is top quartile globally. According to our VFM (Valuation, Fundamentals, Valuation) model, KB Financial resides in the top decile globally, from over 2000 banks.

KB Financial: Trends on the up as Diversification Kicks In

In this insight, we discuss 10 different mean reversion pair trade ideas among the 6 major banks in Korea. The six major banks have had solid share price performances this year as their share prices are up on average 23.5% YTD, outperforming the market. The overall trend among these different Korean banks' share prices (in terms of the % daily difference in the gaps of their share prices) has been consolidating.  Our data sample covers 246 trading days in the past year. An example of the pair trade idea is between <a href="https://www.smartkarma.com/entities/kb-financial-group-inc" target="_blank" data-smartkarma-citation="entities:718:1" rel="noopener">KB Financial (105560 KS)</a> and <a href="https://www.smartkarma.com/entities/shinhan-financial-group-ltd" target="_blank" data-smartkarma-citation="entities:6978:1" rel="noopener">Shinhan Financial (055550 KS). </a>In the past year, there were four trading days when the daily change in the difference between two stocks exceeded 15% and three trading days when the daily change in the difference between two stocks exceeded -10%. In the past several weeks, the gap in the difference between two stocks has been consolidating and there does not appear to be noticeable mean reversion trading opportunity on this pair trade right now.Trading idea: Look to put a mean reversion pair trade (long-short) if and when the daily change in the difference between the two stocks exceed either 15% or -10%.

In this insight, we discuss 10 different mean reversion pair trade ideas among the 6 major banks in Korea. The six major banks have had solid share price performances this year as their share prices are up on average 23.5% YTD, outperforming the market. The overall trend among these different Korean banks' share prices (in terms of the % daily difference in the gaps of their share prices) has been consolidating.  Our data sample covers 246 trading days in the past year. An example of the pair trade idea is between KB Financial (105560 KS) and Shinhan Financial (055550 KS). In the past year, there were four trading days when the daily change in the difference between two stocks exceeded 15% and three trading days when the daily change in the difference between two stocks exceeded -10%. In the past several weeks, the gap in the difference between two stocks has been consolidating and there does not appear to be noticeable mean reversion trading opportunity on this pair trade right now.Trading idea: Look to put a mean reversion pair trade (long-short) if and when the daily change in the difference between the two stocks exceed either 15% or -10%. 

Mean Reversion Pair Trade Ideas in the Korean Banking Sector

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In this insight, we discuss the risk vs. reward of Kakao Bank shares after the sharp appreciation of its share price post IPO. Kakao Bank's share price has appreciated to 78,500 won, up 101% from the IPO price of 39,000 won. Kakao Bank's market cap has ballooned to 37.3 trillion won.
Kakao Bank has now become the 10th largest stock in KOSPI. Kakao Bank's market cap is now similar to the combined market caps of the two largest banking groups in Korea including <a href="https://www.smartkarma.com/entities/kb-financial-group-inc" target="_blank" data-smartkarma-citation="entities:718:1" rel="noopener">KB Financial (105560 KS)</a> and <a href="https://www.smartkarma.com/entities/shinhan-financial-group-ltd" target="_blank" data-smartkarma-citation="entities:6978:1" rel="noopener">Shinhan Financial (055550 KS)</a> - 42 trillion won. After this sharp appreciation, we believe that the risk-reward ratio of Kakao Bank is no longer attractive and change our view on the company to NEGATIVE.  
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In this insight, we discuss the risk vs. reward of Kakao Bank shares after the sharp appreciation of its share price post IPO. Kakao Bank's share price has appreciated to 78,500 won, up 101% from the IPO price of 39,000 won. Kakao Bank's market cap has ballooned to 37.3 trillion won.
Kakao Bank has now become the 10th largest stock in KOSPI. Kakao Bank's market cap is now similar to the combined market caps of the two largest banking groups in Korea including KB Financial (105560 KS) and Shinhan Financial (055550 KS) - 42 trillion won. After this sharp appreciation, we believe that the risk-reward ratio of Kakao Bank is no longer attractive and change our view on the company to NEGATIVE.  


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)

FnGuide Top 10 December Rebalancing: Watch KB Financial (Add) & POSCO (Delete)

This post looks at another noteworthy local index rebalancing (FnGuide Top 10) in December. It seems likely that POSCO will be excluded, and KB...

Sanghyun Park

KakaoBank - End of the 1 Month Lock Up Period & More Block Selling Ahead Likely by Major Investors

There are 3.14 million shares that will no longer be under the lock up period for KakaoBank starting 6 September, which represents 0.7% outstanding...

Douglas Kim

KB Financial: Trends on the up as Diversification Kicks In

KB commands a much more diversified and balanced business model than in the past. Fundamental trends are improving and shares are still cheap.

Paul Hollingworth

Mean Reversion Pair Trade Ideas in the Korean Banking Sector

In this insight, we discuss 10 different mean reversion pair trade ideas among the 6 major banks in Korea.Our data sample covers 246 trading days...

Douglas Kim

Kakao Bank - Risk Vs. Reward Post IPO

After this sharp appreciation, we believe that the risk-reward ratio of Kakao Bank is no longer attractive and change our view on the company to...

Douglas Kim

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