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>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>Limiting extensions to four times after a 90-day repayment and mandating repayment after 12 months increases short-selling costs. The revision omits limits on position-holding cycles, disappointing retail investors.</li>
<li>Today's release did not set a timeline for short-selling resumption. The ruling party has requested it after March 2025, with key officials present suggesting next year March resumption.</li>
<li>Regarding the electronic system implementation, core content aligns with the draft, but newly revealed institution numbers add a new perspective. Uncertainties remain on integrating overseas stock borrowing into the system.</li>
</ul>


Limiting extensions to four times after a 90-day repayment and mandating repayment after 12 months increases short-selling costs. The revision omits limits on position-holding cycles, disappointing retail investors.
Today's release did not set a timeline for short-selling resumption. The ruling party has requested it after March 2025, with key officials present suggesting next year March resumption.
Regarding the electronic system implementation, core content aligns with the draft, but newly revealed institution numbers add a new perspective. Uncertainties remain on integrating overseas stock borrowing into the system.


Specifics of Korea's Official Short-Selling Regulations, Announced This Morning

<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)

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

Specifics of Korea's Official Short-Selling Regulations, Announced This Morning

This post outlines the details of Korea's newly updated short selling regulations, which were officially announced this morning by the ruling party...

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

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

Specifics of Korea's Official Short-Selling Regulations, Announced This Morning

This post outlines the details of Korea's newly updated short selling regulations, which were officially announced this morning by the ruling party...

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...