Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Event-Driven

<ul>
<li>It was reported that KT will provide an extra 15% to its employees who purchase KT's treasury shares worth 5 million won ($4,000) to 20 million won ($16,000).</li>
<li>We have a positive view of this extra 15% bonus for ESOP treasury shares purchase. It has the positive effect of increasing demand for KT shares among its employees.</li>
<li>If 10,000 employees purchase 10 million won per person, this would be 115 billion won in total (including 15% extra provided by KT). </li>
</ul>


It was reported that KT will provide an extra 15% to its employees who purchase KT's treasury shares worth 5 million won ($4,000) to 20 million won ($16,000).
We have a positive view of this extra 15% bonus for ESOP treasury shares purchase. It has the positive effect of increasing demand for KT shares among its employees.
If 10,000 employees purchase 10 million won per person, this would be 115 billion won in total (including 15% extra provided by KT). 


KT Grants Extra 15% for ESOP Treasury Shares Purchase

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

<ul>
<li>The DAX and Hang Seng are reversing their downtrends while MSCI China (MCHI-US) and China Internet (KWEB-US) are currently testing their respective multi-month downtrends.</li>
<li>Reversals of these downtrends would signal a bear market rally in progress.</li>
<li>We will need to see more basing, followed by base breakouts, in order to get bullish -- a process that would likely take weeks or months.</li>
</ul>


The DAX and Hang Seng are reversing their downtrends while MSCI China (MCHI-US) and China Internet (KWEB-US) are currently testing their respective multi-month downtrends.
Reversals of these downtrends would signal a bear market rally in progress.
We will need to see more basing, followed by base breakouts, in order to get bullish -- a process that would likely take weeks or months.


Still Bearish, But On Watch for Bear Market Rally; Buying Toshiba 6502-JP, Defensive Sectors

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.

<ul>
<li>The debating point is whether ADRs can be created from local underlying shares once the FOL is hit if the ADR issuance cap isn't entirely burned.</li>
<li>The answer is Yes. ADRs can still be created. That is one of the exceptions that the Korea FSS allows for exceeding the foreign ownership limit.</li>
<li>This is why we saw a hefty premium on KT ADR when it reached and stayed at zero foreign room since 2015 AND an increase in ADRs through DR creation.</li>
</ul>


The debating point is whether ADRs can be created from local underlying shares once the FOL is hit if the ADR issuance cap isn't entirely burned.
The answer is Yes. ADRs can still be created. That is one of the exceptions that the Korea FSS allows for exceeding the foreign ownership limit.
This is why we saw a hefty premium on KT ADR when it reached and stayed at zero foreign room since 2015 AND an increase in ADRs through DR creation.


SK Telecom: Clarifications over ADR Creation & Premium with Zero Foreign Room

Equity Bottom-Up

<ul>
<li>We analyzed the different share price movements of SK Telecom relative to KT and LG Uplus from 2005 to 2022 when foreign ownership of SK Telecom remained above 99%.</li>
<li>From 2005 to 2022, KT and LG Uplus outperformed SKT in 7 and 6 out of 11 periods, respectively when the foreign ownership of SKT was above 99%.</li>
<li>Once KT's foreign ownership rises to the 93-95% range, there will be more concerns about foreign ownership limit which means that LG Uplus could be in focus once again. </li>
</ul>


We analyzed the different share price movements of SK Telecom relative to KT and LG Uplus from 2005 to 2022 when foreign ownership of SK Telecom remained above 99%.
From 2005 to 2022, KT and LG Uplus outperformed SKT in 7 and 6 out of 11 periods, respectively when the foreign ownership of SKT was above 99%.
Once KT's foreign ownership rises to the 93-95% range, there will be more concerns about foreign ownership limit which means that LG Uplus could be in focus once again. 


Price Comparisons of SK Telecom, KT, & LG Uplus When SK Telecom Reaches 99%+ Foreign Ownership

Cross Asset Strategy

<ul>
<li>Sri Lanka defaulted on its debt for the first time in its history.</li>
<li>South Korea is the biggest investor in Sri Lanka. About 20% of foreign companies entering Sri Lanka are Korean companies.</li>
<li>Other emerging/frontier market countries including Turkey, Pakistan, South Africa, Russia, Ukraine, Belarus, El Salvador, Lebanon, Ethiopia, Ghana, Kenya, Egypt, Tunisia and Peru also face potential debt defaults. </li>
</ul>


Sri Lanka defaulted on its debt for the first time in its history.
South Korea is the biggest investor in Sri Lanka. About 20% of foreign companies entering Sri Lanka are Korean companies.
Other emerging/frontier market countries including Turkey, Pakistan, South Africa, Russia, Ukraine, Belarus, El Salvador, Lebanon, Ethiopia, Ghana, Kenya, Egypt, Tunisia and Peru also face potential debt defaults. 


Sri Lanka Defaults on Debt: South Korea Is the Biggest Investor & Domino Effect on Other Countries?

South Korea

KT Corporation provides telecommunication services including local, long distance, and international calling, satellite communication, data transmission, and wireless telephone services in South Korea.  The Company also offers network portal and high-speed Internet access services using asymmetric digital subscriber lines (ADSLs).

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KT Corp Sp Adr (KT US)

KT Grants Extra 15% for ESOP Treasury Shares Purchase

It was reported that KT will provide an extra 15% to its employees who purchase KT's treasury shares worth 5 million won ($4,000) to 20 million won...

Douglas Kim

Still Bearish, But On Watch for Bear Market Rally; Buying Toshiba 6502-JP, Defensive Sectors

The $DAX and Hang Seng are reversing their downtrends while China $MCHI and China Internet $KWEB are currently testing their respective multi-month...

Vermilion Research

SK Telecom: Clarifications over ADR Creation & Premium with Zero Foreign Room

This post clarifies whether ADRs can still be created for FOL stocks like SKT even when the foreign ownership limit is reached.

Sanghyun Park

Price Comparisons of SK Telecom, KT, & LG Uplus When SK Telecom Reaches 99%+ Foreign Ownership

We analyzed the different share price movements of SK Telecom relative to KT and LG Uplus from 2005 to 2022 when foreign ownership of SK Telecom...

Douglas Kim

Sri Lanka Defaults on Debt: South Korea Is the Biggest Investor & Domino Effect on Other Countries?

Sri Lanka defaulted on its debt for the first time in its history. South Korea is the biggest investor in Sri Lanka. About 20% of foreign companies...

Douglas Kim

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