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

Korea Stock Exchange KOSPI 200 / Event-Driven

<ul>
<li>The government will announce short selling improvements Thursday. A leaked detail includes limiting 90-day short position extensions.</li>
<li>Limiting the 90-day short position holding period may ease local investor concerns, but it could shrink the short selling market, potentially affecting overseas fund outflows.</li>
<li>Resuming short selling in early July may bring new flow patterns due to temporary distortions from mandatory repayment within 90 days and limitations on position extensions, increasing price impacts.</li>
</ul>


The government will announce short selling improvements Thursday. A leaked detail includes limiting 90-day short position extensions.
Limiting the 90-day short position holding period may ease local investor concerns, but it could shrink the short selling market, potentially affecting overseas fund outflows.
Resuming short selling in early July may bring new flow patterns due to temporary distortions from mandatory repayment within 90 days and limitations on position extensions, increasing price impacts.


Korea's Finalized Short-Selling Rules Include Limiting 90-Day Short Position Extensions

<ul>
<li>According to market information confirmed so far, the resumption is set for July 1st, and short selling will be restricted to the constituents of KOSPI 200 and KOSDAQ 150.</li>
<li>The surge in trading volume likely stemmed from the return of long-short positions post-short-selling ban, leading to an overall market volume increase.</li>
<li>Another critical factor is the buying pressure on value-up stocks resuming in early July. We should aim at the price impacts of intersecting long-short flows and value-up stock purchases.</li>
</ul>


According to market information confirmed so far, the resumption is set for July 1st, and short selling will be restricted to the constituents of KOSPI 200 and KOSDAQ 150.
The surge in trading volume likely stemmed from the return of long-short positions post-short-selling ban, leading to an overall market volume increase.
Another critical factor is the buying pressure on value-up stocks resuming in early July. We should aim at the price impacts of intersecting long-short flows and value-up stock purchases.


July Short Selling Resumption in Korea: Local Market Info & Trading Considerations

<ul>
<li>Lee Bok-hyun hopes for short selling to resume by late June. Given his influence on the Value-up policy, it's likely to happen.</li>
<li>Lee expects key tax incentives for the value-up program to be included in the July tax reform bill, showing a market-friendly stance.</li>
<li>Yesterday's New York event had a very positive atmosphere with more attendees than expected, showing genuine investor interest, likely ensuring sustained interest in Korea's Value-up program.</li>
</ul>


Lee Bok-hyun hopes for short selling to resume by late June. Given his influence on the Value-up policy, it's likely to happen.
Lee expects key tax incentives for the value-up program to be included in the July tax reform bill, showing a market-friendly stance.
Yesterday's New York event had a very positive atmosphere with more attendees than expected, showing genuine investor interest, likely ensuring sustained interest in Korea's Value-up program.


FSS Head's Aggressive Remarks for Value-Up at NY Event, Incl. Short Selling Resumption Late June

<ul>
<li>Local institutional investors were disappointed Kiwoom omitted COE from their value-up disclosure. They seek clearer plans to address low-yield assets and reduce COE.</li>
<li>Rapidly rising interest in COE among local institutional investors is now shaping the screening criteria for the Korea Exchange's value-up index, possibly using COE as a primary factor for inclusion.</li>
<li>Competition likely centers on selecting and weighting stocks, including those beyond KOSPI 200. Key metric: COE linked with ROE.</li>
</ul>


Local institutional investors were disappointed Kiwoom omitted COE from their value-up disclosure. They seek clearer plans to address low-yield assets and reduce COE.
Rapidly rising interest in COE among local institutional investors is now shaping the screening criteria for the Korea Exchange's value-up index, possibly using COE as a primary factor for inclusion.
Competition likely centers on selecting and weighting stocks, including those beyond KOSPI 200. Key metric: COE linked with ROE.


Hot Topic Among Local Institutions in Recent Days: Utilizing COE in Value-Up Investing

<ul>
<li>The value-up index aims to align closely with the KOSPI 200's composition, adjusting stock weights based on factors from KRX Governance Leaders 100 and KRX ESG Dividend Opportunities Index.</li>
<li>Insiders confirm NPS will create new funds to track the value-up index, needing SAA adjustments and Fund Management Committee approval. Despite hurdles, government backing suggests smooth NPS involvement.</li>
<li>Buybacks could cause passive outflows in KOSPI 200 rebalancing and inflows in value-up index rebalancing. This timing discrepancy could create a consistent passive flow pattern for these stocks.</li>
</ul>


The value-up index aims to align closely with the KOSPI 200's composition, adjusting stock weights based on factors from KRX Governance Leaders 100 and KRX ESG Dividend Opportunities Index.
Insiders confirm NPS will create new funds to track the value-up index, needing SAA adjustments and Fund Management Committee approval. Despite hurdles, government backing suggests smooth NPS involvement.
Buybacks could cause passive outflows in KOSPI 200 rebalancing and inflows in value-up index rebalancing. This timing discrepancy could create a consistent passive flow pattern for these stocks.


Latest Info on Value-Up Index Involving KRX & NPS: Potential Flow Trading Patterns

South Korea

The KOSPI 200 Index is a capitalization-weighted index of 200 Korean stocks which make up 93% of the total market value of the Korea Stock Exchange. The index was developed with a base value of 100 as of January 3, 1990.

Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX EQUITY)

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Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX EQUITY)

Korea's Finalized Short-Selling Rules Include Limiting 90-Day Short Position Extensions

This post investigates the finalized version of Korea's new short-selling rules, which surprisingly include limiting 90-day holding position...

Sanghyun Park

July Short Selling Resumption in Korea: Local Market Info & Trading Considerations

This post provides information circulating in Korea's local market about the resumption of short selling in July and its potential trading...

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FSS Head's Aggressive Remarks for Value-Up at NY Event, Incl. Short Selling Resumption Late June

This post delivers Korea FSS Head (Lee Bok-hyun)'s very aggressive remarks for the Value-up program at yesterday's investors meeting in New York....

Sanghyun Park

Hot Topic Among Local Institutions in Recent Days: Utilizing COE in Value-Up Investing

This post delves into the recent buzz among local institutions, as they gear up to incorporate COE linked with ROE for value-up investing.

Sanghyun Park

Latest Info on Value-Up Index Involving KRX & NPS: Potential Flow Trading Patterns

This post gathers the latest info on the value-up index involving Korea Exchange and National Pension Service and investigates potential flow...

Sanghyun Park

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)