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

<ul>
<li>KT's foreign room has been rising since early September last year. If this trend continues, it will likely approach the inclusion borderline of 15% within a month or two.</li>
<li>This trend is expected to continue for the time being as the tough relationship between the KT CEO and the government seems unlikely to be resolved in the short term.</li>
<li>The February inclusion is pretty tight, but May seems like we could be looking out for it.</li>
</ul>


KT's foreign room has been rising since early September last year. If this trend continues, it will likely approach the inclusion borderline of 15% within a month or two.
This trend is expected to continue for the time being as the tough relationship between the KT CEO and the government seems unlikely to be resolved in the short term.
The February inclusion is pretty tight, but May seems like we could be looking out for it.


Foreign Ownership Limit Stocks in Korea: KT Is Again in the Limelight

<ul>
<li>Names with a significant impact: <a href="https://www.smartkarma.com/entities/kt-corp" target="_blank" data-smartkarma-citation="entities:1112:1" rel="noopener">KT (030200)</a>, <a href="https://www.smartkarma.com/entities/shinhan-financial-group-ltd" target="_blank" data-smartkarma-citation="entities:6978:1" rel="noopener">Shinhan Financial (055550)</a>, <a href="https://www.smartkarma.com/entities/korean-air-lines-co-ltd" target="_blank" data-smartkarma-citation="entities:11048:1" rel="noopener">Korean Air (003490)</a>, <a href="https://www.smartkarma.com/entities/lg-energy-solution" target="_blank" data-smartkarma-citation="entities:33464:1" rel="noopener">LG Energy (373220)</a>, <a href="https://www.smartkarma.com/entities/dongwon-industries-co-ltd" target="_blank" data-smartkarma-citation="entities:1783:1" rel="noopener">Dongwon Industries (006040)</a>, <a href="https://www.smartkarma.com/entities/lotte-fine-chemical-co-ltd" target="_blank" data-smartkarma-citation="entities:507:1" rel="noopener">Lotte Fine Chemical (004000)</a>, <a href="https://www.smartkarma.com/entities/meritz-fire-marine-insurance-co-ltd" target="_blank" data-smartkarma-citation="entities:20468:1" rel="noopener">Meritz Fire (000060)</a>, &amp; <a href="https://www.smartkarma.com/entities/mirae-asset-daewoo-co-ltd-b50c4d95-1687-46cb-9b58-f79ce0e72670" target="_blank" data-smartkarma-citation="entities:12061:1" rel="noopener">Mirae Asset (006800)</a> </li>
<li>Limiting the target size of our flow trading to only the fund size that directly mirrors it (₩17.8T) on T-1 Effective will increase our winning rate.</li>
<li>Lately, local pensions have been seen as rather taking advantage of flow trading in index rebalancing events, so I also recommend keeping the trading window fairly tight.</li>
</ul>


Names with a significant impact: KT (030200), Shinhan Financial (055550), Korean Air (003490), LG Energy (373220), Dongwon Industries (006040), Lotte Fine Chemical (004000), Meritz Fire (000060), &amp; Mirae Asset (006800) 
Limiting the target size of our flow trading to only the fund size that directly mirrors it (₩17.8T) on T-1 Effective will increase our winning rate.
Lately, local pensions have been seen as rather taking advantage of flow trading in index rebalancing events, so I also recommend keeping the trading window fairly tight.


KOSPI 200 Up/Down Weights: Official Results & Passive Impacts on T-1 Effective

<ul>
<li>Lotte Chemical offers 8.5M new shares, which is ₩1.1T based on the provisional price of ₩130,000. This is a capital increase rate of 24.8%.</li>
<li>This event has already been leaked in advance from early last week, so it isn't easy to expect a significant return from the short-selling approach immediately after the announcement.</li>
<li>Instead, we should pay attention to the KOSPI 200 passive inflow that occurs the day before the ex-date. It is estimated to be approximately 0.8x ADTV.</li>
</ul>


Lotte Chemical offers 8.5M new shares, which is ₩1.1T based on the provisional price of ₩130,000. This is a capital increase rate of 24.8%.
This event has already been leaked in advance from early last week, so it isn't easy to expect a significant return from the short-selling approach immediately after the announcement.
Instead, we should pay attention to the KOSPI 200 passive inflow that occurs the day before the ex-date. It is estimated to be approximately 0.8x ADTV.


Lotte Chemical Offering Terms & Trading Angle Targeting K200 Inflow on Ex-Date

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

<ul>
<li>In this insight, we highlight the pricing gap divergence of the major Korean holdcos and opcos amid market carnage.</li>
<li>In general, more holdcos/quasi-holdcos have been outperforming the opcos in the past year, as compared to the previous years as more investors seek value-oriented, deep NAV discount stocks.</li>
<li>We highlight 26 pair trades that involve Korean holdcos and opcos.</li>
</ul>


In this insight, we highlight the pricing gap divergence of the major Korean holdcos and opcos amid market carnage.
In general, more holdcos/quasi-holdcos have been outperforming the opcos in the past year, as compared to the previous years as more investors seek value-oriented, deep NAV discount stocks.
We highlight 26 pair trades that involve Korean holdcos and opcos.


Korean Holdcos Vs Opcos Gap Spreads Opportunities Amid Market Carnage

<ul>
<li>The KAL event is almost over. But we still have Asiana Airlines. The KDB's Asiana CB conversion should also be considered a foregone conclusion.</li>
<li>Applying the case of KAL, the KDB will likely file conversion when 30 days have elapsed since receiving the repayment notice. For this, the prevailing local consensus is June 10.</li>
<li>Conversion filing on July 8 and listing on July 29 with the 15-day delay rule applied is a likely scenario. Hence, our entry point should be from July 4.</li>
</ul>


The KAL event is almost over. But we still have Asiana Airlines. The KDB's Asiana CB conversion should also be considered a foregone conclusion.
Applying the case of KAL, the KDB will likely file conversion when 30 days have elapsed since receiving the repayment notice. For this, the prevailing local consensus is June 10.
Conversion filing on July 8 and listing on July 29 with the 15-day delay rule applied is a likely scenario. Hence, our entry point should be from July 4.


HMM-Like Dilution Event: Korean Air Is Nearly Done, But Asiana Airlines Gearing Up

South Korea

Korean Air Lines Co., Ltd. operates air transportation services.  The Company's services include passenger and cargo transportation, aircraft maintenance, and air catering.  Korean Air Lines provides domestic and international airline services.

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Korean Air Lines (003490 KS)

Foreign Ownership Limit Stocks in Korea: KT Is Again in the Limelight

This post examines Korea's foreign ownership-restricted stocks and discusses potential momentum trading opportunities for KT.

Sanghyun Park

KOSPI 200 Up/Down Weights: Official Results & Passive Impacts on T-1 Effective

This post details the official results of the KOSPI 200 up/down weights and examines the passive impacts on T-1 Effective, which is December 8.

Sanghyun Park

Lotte Chemical Offering Terms & Trading Angle Targeting K200 Inflow on Ex-Date

This post details Lotte Chemical's paid-in capital increase and discusses the trading angle targeting the KOSPI 200 passive inflow that occurs...

Sanghyun Park

Korean Holdcos Vs Opcos Gap Spreads Opportunities Amid Market Carnage

In this insight, we highlight the pricing gap divergence of the major Korean holdcos and opcos amid market carnage. We highlight 26 pair trades...

Douglas Kim

HMM-Like Dilution Event: Korean Air Is Nearly Done, But Asiana Airlines Gearing Up

This post discusses a likely schedule of Asiana Airlines' CB conversion event, which allows us to capture a trading entry point for an HMM-like...

Sanghyun Park

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