Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

Korea Stock Exchange Kospi Index / Technical Analysis

<ul>
<li>Throughout 2024 we've discussed the theme of more global indexes/Sectors breaking out to new highs, the latest being the UK's FTSE 100, South Korea's KOSPI, and Norway's Oslo OBX.</li>
<li>This is classic bull market behavior. The long list of breakouts discussed throughout 2024 include the MSCI EM, ACWI, MSCI EAFE (in local currency), Israel, Germany, Sweden, France, and Ireland.</li>
<li>Another important thing to note is that none of these breakouts are failing; they all remain above their major breakout levels, a very bullish sign. We remain bullish.</li>
</ul>


Throughout 2024 we've discussed the theme of more global indexes/Sectors breaking out to new highs, the latest being the UK's FTSE 100, South Korea's KOSPI, and Norway's Oslo OBX.
This is classic bull market behavior. The long list of breakouts discussed throughout 2024 include the MSCI EM, ACWI, MSCI EAFE (in local currency), Israel, Germany, Sweden, France, and Ireland.
Another important thing to note is that none of these breakouts are failing; they all remain above their major breakout levels, a very bullish sign. We remain bullish.


More Countries Breaking Out; Bullish Outlook Intact; FTSE 100, KOSPI, and Oslo OBX Breaking Out

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>NPS abruptly joins 'Corporate Value Up Program', plans to select three asset managers. Deadline: this month's 29th; results: March 19th, possibly linked to Korea Premium Index ETF launch in mid-May.</li>
<li>The document outlines guidelines, allocating 90-100% to value stocks, with KOSDAQ under 20%. While benchmarked to the internally-built index, it will likely focus on Korea Premium Index and KOSDAQ Global.</li>
<li>The fund size is crucial. NPS will disclose details later. But still, there is considerable room to this year's ceiling for local equity; a significant amount could flow into this.</li>
</ul>


NPS abruptly joins 'Corporate Value Up Program', plans to select three asset managers. Deadline: this month's 29th; results: March 19th, possibly linked to Korea Premium Index ETF launch in mid-May.
The document outlines guidelines, allocating 90-100% to value stocks, with KOSDAQ under 20%. While benchmarked to the internally-built index, it will likely focus on Korea Premium Index and KOSDAQ Global.
The fund size is crucial. NPS will disclose details later. But still, there is considerable room to this year's ceiling for local equity; a significant amount could flow into this.


Korea NPS Abruptly Joins Corporate Value Up Program: According to Document Obtained from NPS

<ul>
<li>Estimating FINANCIAL INVESTMENT's dividend arbitrage positions' exact size and liquidation plans is challenging. Yet, past trading patterns suggest a substantial portion may be liquidated soon, akin to January's volume (≥₩2T).</li>
<li>Many local market participants expect a scenario unfolding post-March, aligning with KOSPI companies rescheduling ex-dividend dates. Expect substantial position liquidation by April's end, likely impacting index negatively, akin to January.</li>
<li>Position setups should adapt to short-term index corrections, leveraging earnings season for earnings-based spreads using index short hedging.</li>
</ul>


Estimating FINANCIAL INVESTMENT's dividend arbitrage positions' exact size and liquidation plans is challenging. Yet, past trading patterns suggest a substantial portion may be liquidated soon, akin to January's volume (≥₩2T).
Many local market participants expect a scenario unfolding post-March, aligning with KOSPI companies rescheduling ex-dividend dates. Expect substantial position liquidation by April's end, likely impacting index negatively, akin to January.
Position setups should adapt to short-term index corrections, leveraging earnings season for earnings-based spreads using index short hedging.


Investigating the Size and Timing of Korea's Local Dividend Arbitrage Traders' Position Liquidation

<ul>
<li>The Financial Services Commission plans to delegate merger swap ratio determination to corporate autonomy. Initially, only mergers between non-affiliated companies will be affected, with potential extension to affiliate mergers later.</li>
<li>The Financial Services Commission aims to start the legislative process in mid-February and complete the amendment by the third quarter of this year.</li>
<li>This change will enhance trading dynamics by decreasing the likelihood of prices aligning with the ratio just before merger announcements due to pre-information leakage.</li>
</ul>


The Financial Services Commission plans to delegate merger swap ratio determination to corporate autonomy. Initially, only mergers between non-affiliated companies will be affected, with potential extension to affiliate mergers later.
The Financial Services Commission aims to start the legislative process in mid-February and complete the amendment by the third quarter of this year.
This change will enhance trading dynamics by decreasing the likelihood of prices aligning with the ratio just before merger announcements due to pre-information leakage.


Rule Changes to Swap Ratio Calculations for Merger Swaps in Korea

<ul>
<li>Local sources confirm government's focus on strengthening stock market for April election. Market expects aggressive policies for share cancellations, including corporate defense mechanisms.</li>
<li>Chosun Ilbo, a government-friendly and influential media outlet,  advocates for corporate defense mechanisms to boost share cancellations, shaping a political atmosphere.</li>
<li>This theme is likely to emerge in Korea's market. We must consider political dynamics and screen companies with high treasury shares for potential stock boosts.</li>
</ul>


Local sources confirm government's focus on strengthening stock market for April election. Market expects aggressive policies for share cancellations, including corporate defense mechanisms.
Chosun Ilbo, a government-friendly and influential media outlet,  advocates for corporate defense mechanisms to boost share cancellations, shaping a political atmosphere.
This theme is likely to emerge in Korea's market. We must consider political dynamics and screen companies with high treasury shares for potential stock boosts.


Emerging Korean Investment Theme: Potential Corporate Defense Mechanisms for Share Cancellations

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)

More Countries Breaking Out; Bullish Outlook Intact; FTSE 100, KOSPI, and Oslo OBX Breaking Out

Bullish Outlook Intact; More Countries Breaking Out, including UK's FTSE 100, South Korea's KOSPI, and Norway's Oslo OBX; Buys in global...

Vermilion Research

Korea NPS Abruptly Joins Corporate Value Up Program: According to Document Obtained from NPS

Three days ago, NPS announced three external managers for the Value-up initiative: Bearing, Woori, and Truston. Today, new information has surfaced...

Sanghyun Park

Investigating the Size and Timing of Korea's Local Dividend Arbitrage Traders' Position Liquidation

This post delves into the size and timing of position liquidation by local dividend arbitrage traders in Korea, exploring potential subsequent...

Sanghyun Park

Rule Changes to Swap Ratio Calculations for Merger Swaps in Korea

Today, the FSC announced legislative plans regarding mandatory disclosures for mergers mentioned in this post and voluntary determination of merger...

Sanghyun Park

More Countries Breaking Out; Bullish Outlook Intact; FTSE 100, KOSPI, and Oslo OBX Breaking Out

Bullish Outlook Intact; More Countries Breaking Out, including UK's FTSE 100, South Korea's KOSPI, and Norway's Oslo OBX; Buys in global...

Vermilion Research

Korea NPS Abruptly Joins Corporate Value Up Program: According to Document Obtained from NPS

Three days ago, NPS announced three external managers for the Value-up initiative: Bearing, Woori, and Truston. Today, new information has surfaced...

Sanghyun Park

Investigating the Size and Timing of Korea's Local Dividend Arbitrage Traders' Position Liquidation

This post delves into the size and timing of position liquidation by local dividend arbitrage traders in Korea, exploring potential subsequent...

Sanghyun Park

Rule Changes to Swap Ratio Calculations for Merger Swaps in Korea

Today, the FSC announced legislative plans regarding mandatory disclosures for mergers mentioned in this post and voluntary determination of merger...

Sanghyun Park

Emerging Korean Investment Theme: Potential Corporate Defense Mechanisms for Share Cancellations

This post introduces Korea's new investment trend: targeting stocks with high treasury shares for potential share cancellations with the...

Sanghyun Park