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>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

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Douglas Research Advisory

<ul>
<li>Kum Yang announced a rights offering capital raise of 450 billion won which will be used for facility investments and debt repayment. </li>
<li>The estimated rights offering price is 38,950 won, which is 31% lower than current price (56,500 won). </li>
<li><em><strong>We remain negative on Kum Yang. Despite the sharply lower rights offering price relative to current price, we would avoid the rights offering. </strong></em></li>
</ul>


Kum Yang announced a rights offering capital raise of 450 billion won which will be used for facility investments and debt repayment. 
The estimated rights offering price is 38,950 won, which is 31% lower than current price (56,500 won). 
We remain negative on Kum Yang. Despite the sharply lower rights offering price relative to current price, we would avoid the rights offering. 


Kum Yang: Rights Offering Capital Raise of 450 Billion Won

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)

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

Kum Yang: Rights Offering Capital Raise of 450 Billion Won

Kum Yang announced a rights offering capital raise of 450 billion won. The estimated rights offering price is 38,950 won, which is 31% lower than...

Douglas Kim

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