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 Index / Event-Driven

<ul>
<li>The rule's real impact isn't exposing which institutions are shorting stocks, as much of Korea's short-selling is done via swaps (TRS).</li>
<li>The key takeaway is that more stocks require mandatory disclosure as lowering the threshold to 0.01% makes it tougher for local brokers to avoid reporting.</li>
<li>Local and foreign institutions use a single Prime Brokerage Service (PBS) for borrowing efficiency, especially with smaller stocks, aiding in retail access and revealing short-selling strategies amid new disclosure rules.</li>
</ul>


The rule's real impact isn't exposing which institutions are shorting stocks, as much of Korea's short-selling is done via swaps (TRS).
The key takeaway is that more stocks require mandatory disclosure as lowering the threshold to 0.01% makes it tougher for local brokers to avoid reporting.
Local and foreign institutions use a single Prime Brokerage Service (PBS) for borrowing efficiency, especially with smaller stocks, aiding in retail access and revealing short-selling strategies amid new disclosure rules.


Korea's New Short-Selling Balance Reporting Rules Starting December 1: Key Trading Insights

<ul>
<li>MMAS prioritizes dividends over low-PBR, key to government's Value-up momentum. Despite initial market disappointment, dividend stocks rebounded, underscoring continued investor interest.</li>
<li>Government officials are collecting historic dividend data to simulate separate taxation impact of dividend income, likely to be included in July's tax reform bill for National Assembly approval.</li>
<li>Local institutions focus on dividend-centric Value-up trading, targeting stocks with high cash reserves and dividends. Strategy needed to manage market impact pre-tax reform bill in July.</li>
</ul>


MMAS prioritizes dividends over low-PBR, key to government's Value-up momentum. Despite initial market disappointment, dividend stocks rebounded, underscoring continued investor interest.
Government officials are collecting historic dividend data to simulate separate taxation impact of dividend income, likely to be included in July's tax reform bill for National Assembly approval.
Local institutions focus on dividend-centric Value-up trading, targeting stocks with high cash reserves and dividends. Strategy needed to manage market impact pre-tax reform bill in July.


Local Institutions' Value-Up Momentum Moves: Watch the July Tax Reform Bill

<ul>
<li>Today, NPS made the final decision to introduce a reference portfolio. The critical point is the increase in risky assets from 56% to 65%, also decided at today's meeting.</li>
<li>Initially, overseas equity was prioritized, but recent forecasts suggest significant potential in increasing local equity, aligning with the value-up policy.</li>
<li>Monitoring NPS's execution plan, including allocation and timing by asset class, is vital to gauge inflow size, especially for Value-up beneficiaries.</li>
</ul>


Today, NPS made the final decision to introduce a reference portfolio. The critical point is the increase in risky assets from 56% to 65%, also decided at today's meeting.
Initially, overseas equity was prioritized, but recent forecasts suggest significant potential in increasing local equity, aligning with the value-up policy.
Monitoring NPS's execution plan, including allocation and timing by asset class, is vital to gauge inflow size, especially for Value-up beneficiaries.


NPS Confirms Reference Portfolio & Risky Assets Upweight: Implications for Value-Up Stocks

<ul>
<li>Deputy PM Choi Sang-mok commits to aggressively pursue separate taxation of dividend income, marking a shift towards concrete action for value-up policies.</li>
<li>Ever since the introduction of the Value-up policy earlier this year, the primary incentive championed by the local capital market has been the separate taxation of dividend income.</li>
<li>Hence, the government's official commitment to this marks a crucial step in reshaping the Value-up momentum.</li>
</ul>


Deputy PM Choi Sang-mok commits to aggressively pursue separate taxation of dividend income, marking a shift towards concrete action for value-up policies.
Ever since the introduction of the Value-up policy earlier this year, the primary incentive championed by the local capital market has been the separate taxation of dividend income.
Hence, the government's official commitment to this marks a crucial step in reshaping the Value-up momentum.


Significant Developments Emerged Today for Korea's Value-Up

<ul>
<li>KRX considers a comprehensive change to the Value-up Index scoring system. Weightings emphasize ROE, PER, and FCF while reducing PBR weight.</li>
<li>KRX considers adopting scoring-based constituent weighting to prevent JPX Prime 150's issues, but NPS opposes. Float market cap weighting like JPX Prime 150 is contemplated to address concerns.</li>
<li>Momentum trading in the Value-up initiative will favor low PER and high ROE stocks over low PBR. The semiconductor sector is anticipated to benefit significantly from float market cap-based weighting.</li>
</ul>


KRX considers a comprehensive change to the Value-up Index scoring system. Weightings emphasize ROE, PER, and FCF while reducing PBR weight.
KRX considers adopting scoring-based constituent weighting to prevent JPX Prime 150's issues, but NPS opposes. Float market cap weighting like JPX Prime 150 is contemplated to address concerns.
Momentum trading in the Value-up initiative will favor low PER and high ROE stocks over low PBR. The semiconductor sector is anticipated to benefit significantly from float market cap-based weighting.


New Information on Korea Value-Up Index Scoring System & Constituent Weighting

South Korea

The KOSPI Index is a capitalization-weighted index of all common shares on the Korean Stock Exchanges. The Index was developed with a base value of 100 as of January 4, 1980. Note: The preferred shares are excluded in calculating the KOSPI Index from June 14, 2002. 

Korea Stock Exchange Kospi Index (KOSPI INDEX)

Korea Stock Exchange Kospi Index (KOSPI INDEX)

Korea's New Short-Selling Balance Reporting Rules Starting December 1: Key Trading Insights

Kicking off December 1, we’ve got new mandatory short-selling balance reporting rules coming into play: Here are the key things to keep an eye on...

Sanghyun Park

Local Institutions' Value-Up Momentum Moves: Watch the July Tax Reform Bill

This post delves into local institutions' focus on dividends over low-PBR in Value-up momentum trading, with anticipation surrounding the July tax...

Sanghyun Park

NPS Confirms Reference Portfolio & Risky Assets Upweight: Implications for Value-Up Stocks

This post outlines Korea NPS's decision to adopt the reference portfolio, raising risky assets allocation weight by 9%p to 65%, and its...

Sanghyun Park

Significant Developments Emerged Today for Korea's Value-Up

Deputy PM Choi Sang-mok vows to push for separate taxation of dividend income, a key aspect of the Value-up policy, signaling a shift towards...

Sanghyun Park

New Information on Korea Value-Up Index Scoring System & Constituent Weighting

This post delivers new information on the screening scoring system and constituent weighting of the Korea Value-up Index, presently circulating...

Sanghyun Park

Korea's New Short-Selling Balance Reporting Rules Starting December 1: Key Trading Insights

Kicking off December 1, we’ve got new mandatory short-selling balance reporting rules coming into play: Here are the key things to keep an eye on...

Sanghyun Park

Local Institutions' Value-Up Momentum Moves: Watch the July Tax Reform Bill

This post delves into local institutions' focus on dividends over low-PBR in Value-up momentum trading, with anticipation surrounding the July tax...

Sanghyun Park

NPS Confirms Reference Portfolio & Risky Assets Upweight: Implications for Value-Up Stocks

This post outlines Korea NPS's decision to adopt the reference portfolio, raising risky assets allocation weight by 9%p to 65%, and its...

Sanghyun Park

Significant Developments Emerged Today for Korea's Value-Up

​Deputy PM Choi Sang-mok vows to push for separate taxation of dividend income, a key aspect of the Value-up policy, signaling a shift towards...

Sanghyun Park

New Information on Korea Value-Up Index Scoring System & Constituent Weighting

This post delivers new information on the screening scoring system and constituent weighting of the Korea Value-up Index, presently circulating...

Sanghyun Park

Deputy PM Choi Sang-mok vows to push for separate taxation of dividend income, a key aspect of the Value-up policy, signaling a shift towards...