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.

Equity Capital Markets

<ul>
<li>The FSS's correction deadline still starts from October 17, giving Kum Yang until January 16 next year to get everything in order.</li>
<li>We should still be all over this, as the major shareholder likely won’t participate, flooding the market with stock rights and unsubscribed shares, creating a prime 25% discount opportunity.</li>
<li>Kum Yang needs even this 200-300 billion KRW, so cancellation seems unlikely. With the FSS deadline on January 16, they’ll likely submit the revised report mid to late next month.</li>
</ul>


The FSS's correction deadline still starts from October 17, giving Kum Yang until January 16 next year to get everything in order.
We should still be all over this, as the major shareholder likely won’t participate, flooding the market with stock rights and unsubscribed shares, creating a prime 25% discount opportunity.
Kum Yang needs even this 200-300 billion KRW, so cancellation seems unlikely. With the FSS deadline on January 16, they’ll likely submit the revised report mid to late next month.


Main Fact Checks on the Mix-Up Around Kum Yang’s Rights Offering Rollout

<ul>
<li>This rights offering isn’t huge, but the 10M-share overhang post-offering could create solid arb opportunities as existing shareholders may hesitate to participate.</li>
<li>Ryu’s participation is uncertain after gifting shares and converting debt. His 35.6% stake may create unsubscribed shares if rights lapse.</li>
<li>With a 25% discount, this setup offers arb potential during rights trading or public subscription. Kum Yang’s liquidity needs likely invite arb players, but outright positions seem too volatile.</li>
</ul>


This rights offering isn’t huge, but the 10M-share overhang post-offering could create solid arb opportunities as existing shareholders may hesitate to participate.
Ryu’s participation is uncertain after gifting shares and converting debt. His 35.6% stake may create unsubscribed shares if rights lapse.
With a 25% discount, this setup offers arb potential during rights trading or public subscription. Kum Yang’s liquidity needs likely invite arb players, but outright positions seem too volatile.


Kum Yang's Wild Rights Offering Breakdown: A Potential Straight-Up Play for Arb Traders

Event-Driven

<ul>
<li>The main confusion is about the FSS's authority. According to the Capital Markets Act, they can’t approve capital raises but can request corrections for investor protection.</li>
<li>The FSS can issue unlimited correction requests, potentially stalling a capital raise indefinitely, which effectively pulls the plug on the entire deal.</li>
<li>Kum Yang's one is valid today; if no new correction requests arise, the capital increase proceeds. Korea Zinc faces a likely request on the 14th, causing a 2-week delay.</li>
</ul>


The main confusion is about the FSS's authority. According to the Capital Markets Act, they can’t approve capital raises but can request corrections for investor protection.
The FSS can issue unlimited correction requests, potentially stalling a capital raise indefinitely, which effectively pulls the plug on the entire deal.
Kum Yang's one is valid today; if no new correction requests arise, the capital increase proceeds. Korea Zinc faces a likely request on the 14th, causing a 2-week delay.


Clearing up the FSS's Authority on Capital Increases in Korea: Korea Zinc & Kum Yang

<ul>
<li>Personally, the key trading angle is Kum Yang’s exit, which could slash entry costs for the capital raise, with the review announcement dropping as stock rights trading starts.</li>
<li>Along with the usual hit to the pricing from index trackers unloading for rebalancing, there’s a strong chance their sell orders might also include stock rights.</li>
<li>From an entry cost perspective, this November review could trigger a sharp, short-term drop in costs due to stock rights dumping, similar to what we saw with CJ CGV.</li>
</ul>


Personally, the key trading angle is Kum Yang’s exit, which could slash entry costs for the capital raise, with the review announcement dropping as stock rights trading starts.
Along with the usual hit to the pricing from index trackers unloading for rebalancing, there’s a strong chance their sell orders might also include stock rights.
From an entry cost perspective, this November review could trigger a sharp, short-term drop in costs due to stock rights dumping, similar to what we saw with CJ CGV.


Connecting the Dots Between Kum Yang’s Rights Offer & Global Index November Review

<ul>
<li>Kumyang's major shareholders are backing the capital raise, committing ₩160B of the ₩450B total. We’re also likely to see some robust price support for the stock rights in early phases.</li>
<li>Institutional investors still make up about 10% of the SO, with around 8% being active players. These guys could easily start dumping stock rights in bulk.</li>
<li>Retail holds nearly 50% of the SO, increasing volatility and boosting chances for arb spreads. Kumyang's stock futures have solid liquidity, making it a prime arb trading setup.</li>
</ul>


Kumyang's major shareholders are backing the capital raise, committing ₩160B of the ₩450B total. We’re also likely to see some robust price support for the stock rights in early phases.
Institutional investors still make up about 10% of the SO, with around 8% being active players. These guys could easily start dumping stock rights in bulk.
Retail holds nearly 50% of the SO, increasing volatility and boosting chances for arb spreads. Kumyang's stock futures have solid liquidity, making it a prime arb trading setup.


Kumyang's Capital Raise Drop: Breaking It Down from an Arb Trading Play

South Korea

Kum Yang Co., Ltd. specializes in manufacturing blowing agents to foam rubber products and polymers.  The Company also produces other basic fine chemicals, such as sulphur products.

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Kum Yang (001570 KS)

Main Fact Checks on the Mix-Up Around Kum Yang’s Rights Offering Rollout

This post dives into the key facts and clears up the confusion surrounding Kum Yang’s rights issue developments, breaking down what’s been causing...

Sanghyun Park

Kum Yang's Wild Rights Offering Breakdown: A Potential Straight-Up Play for Arb Traders

This post dives into Kum Yang’s chaotic rights offering, which could turn into a prime opportunity for arb traders to seize.

Sanghyun Park

Clearing up the FSS's Authority on Capital Increases in Korea: Korea Zinc & Kum Yang

This post dives into the key points of confusion around the FSS's correction request process for capital increases in Korea.

Sanghyun Park

Connecting the Dots Between Kum Yang’s Rights Offer & Global Index November Review

This post outlines the current screening status of the Global Index November Review for Korean stocks and explores how it could impact Kum Yang's...

Sanghyun Park

Kumyang's Capital Raise Drop: Breaking It Down from an Arb Trading Play

This post breaks down Kumyang’s rights issue, officially accounced yesterday, and dives into it from an arb trading play.

Sanghyun Park

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