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>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

<ul>
<li>Lee urgently appeard on TV today and said, "In June, we will explain whether and when short selling will be resumed, and what criteria we might use for the resumption."</li>
<li>He noted considering flexible partial short selling resumption even if only some conditions are met, contrasting the Presidential Office's stance from two days ago.</li>
<li>Presidential Office led short selling ban, now likely under FSC/FSS jurisdiction for resumption.</li>
</ul>


Lee urgently appeard on TV today and said, "In June, we will explain whether and when short selling will be resumed, and what criteria we might use for the resumption."
He noted considering flexible partial short selling resumption even if only some conditions are met, contrasting the Presidential Office's stance from two days ago.
Presidential Office led short selling ban, now likely under FSC/FSS jurisdiction for resumption.


FSS Head Lee Made an Urgent TV Appearance Today to Discuss the Resumption of Short Selling

<ul>
<li>The Feb 26th announcement introduces the Corporate Value Up Program and unveils the Korea Premium Index direction. Methodology finalization expected by mid-March; ETFs launch by mid-May.</li>
<li>Similar to JPX Prime 150, KRX aims to target enhancing equity spread and PBR trends (+1.0x) while also integrating dividend growth rate. KOSDAQ stocks may be omitted.</li>
<li>NPS's role is vital for the Korea Premium Index, yet aligning its passive strategy with this index faces challenges. Ongoing discussions aim to adjust regulations for this index investment.</li>
</ul>


The Feb 26th announcement introduces the Corporate Value Up Program and unveils the Korea Premium Index direction. Methodology finalization expected by mid-March; ETFs launch by mid-May.
Similar to JPX Prime 150, KRX aims to target enhancing equity spread and PBR trends (+1.0x) while also integrating dividend growth rate. KOSDAQ stocks may be omitted.
NPS's role is vital for the Korea Premium Index, yet aligning its passive strategy with this index faces challenges. Ongoing discussions aim to adjust regulations for this index investment.


What We've Gathered Thus Far Regarding KOREA PREMIUM INDEX: Schedule, Methodology, & NPS

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...

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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...

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FSS Head Lee Made an Urgent TV Appearance Today to Discuss the Resumption of Short Selling

This post highlights Korea FSS Head Lee Bok-hyun's televised remarks today on short-selling resumption and examines their implications

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What We've Gathered Thus Far Regarding KOREA PREMIUM INDEX: Schedule, Methodology, & NPS

This post summarizes what the market has gathered thus far regarding the KOREA PREMIUM INDEX: schedule, methodology, and NPS participation.

Sanghyun Park

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)