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

Global X Lithium & Battery Tech ETF / Event-Driven

<ul>
<li>LG Energy Solution and Samsung SDI will remain in the index as top stocks of pack makers, respectively. Ecopro BM will almost certainly replace L&amp;F in the category of Cathode.</li>
<li>SK IE Technology will newly join the index with Separator's top stock. On the other hand, Lotte Energy Materials and SKC are unlikely to be included.</li>
<li>This event can be a critical inflection point in predicting the counter-flow for short positions against Ecopro BM and L&amp;F in advance.</li>
</ul>


LG Energy Solution and Samsung SDI will remain in the index as top stocks of pack makers, respectively. Ecopro BM will almost certainly replace L&amp;F in the category of Cathode.
SK IE Technology will newly join the index with Separator's top stock. On the other hand, Lotte Energy Materials and SKC are unlikely to be included.
This event can be a critical inflection point in predicting the counter-flow for short positions against Ecopro BM and L&amp;F in advance.


Pre-Positioning Targeting Solactive Global Lithium Index's October Rebalancing

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Quantitative Analysis

<ul>
<li>Total short interest in Hong Kong is HK$435.1bn, marginally higher from end-December. Short notional has moved in line with the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hong Kong Hang Seng Index (HSI INDEX)</a>. </li>
<li>Total short notional of the KOSPI and KOSDAQ market has moved up since end-December and is in line with the move higher in the <a href="https://www.smartkarma.com/entities/korea-stock-exchange-kospi-200-index" target="_blank" data-smartkarma-citation="entities:26021:1" rel="noopener">KOSPI2 INDEX</a> and <a href="https://www.smartkarma.com/entities/kosdaq-150-index" target="_blank" data-smartkarma-citation="entities:31077:1" rel="noopener">KOSDAQ 150 Index</a>.</li>
<li>Short notional in Taiwan is lower over the quarter even as the <a href="https://www.smartkarma.com/entities/taiwan-stock-exchange-weighted-index" target="_blank" data-smartkarma-citation="entities:26056:1" rel="noopener">TWSE INDEX</a> has moved higher over the period. There has been big short covering on some stocks.</li>
</ul>


Total short interest in Hong Kong is HK$435.1bn, marginally higher from end-December. Short notional has moved in line with the Hong Kong Hang Seng Index (HSI INDEX). 
Total short notional of the KOSPI and KOSDAQ market has moved up since end-December and is in line with the move higher in the KOSPI2 INDEX and KOSDAQ 150 Index.
Short notional in Taiwan is lower over the quarter even as the TWSE INDEX has moved higher over the period. There has been big short covering on some stocks.


Short Interest Movements (Q1 2023): HK, Korea, Taiwan, Australia

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

EcoPro Materials / Equity Capital Markets

<ul>
<li>Ecopro Materials, an affiliate of Ecopro, is getting ready to complete its IPO in 2H 2023. Ecopro Co has a 52.8% stake in Ecopro Materials. </li>
<li>Ecopro Materials' core products are lithium cell core materials called precursors, which are used as part of the rechargeable batteries. </li>
<li>The expected market value of Ecopro Materials is about 3 trillion won to 4 trillion won (US$2.3 billion to US$3.0 billion).</li>
</ul>


Ecopro Materials, an affiliate of Ecopro, is getting ready to complete its IPO in 2H 2023. Ecopro Co has a 52.8% stake in Ecopro Materials. 
Ecopro Materials' core products are lithium cell core materials called precursors, which are used as part of the rechargeable batteries. 
The expected market value of Ecopro Materials is about 3 trillion won to 4 trillion won (US$2.3 billion to US$3.0 billion).


Initial Thoughts on the Ecopro Materials IPO

<ul>
<li>The key to this rebalancing is the inclusion of WCP, which satisfies the requirements of minimum listing period and secondary battery sales amount.</li>
<li>As a hedge for the LONG WCP position, we can use Soulbrain and Solus Advanced, whose passive outflow is relatively high among those of a similar size to WCP.</li>
<li>Among large caps, we should pay attention to L&amp;F, Posco Chemical, and Iljin Materials. However, we should be cautious about approaching them as an active trading target.</li>
</ul>


The key to this rebalancing is the inclusion of WCP, which satisfies the requirements of minimum listing period and secondary battery sales amount.
As a hedge for the LONG WCP position, we can use Soulbrain and Solus Advanced, whose passive outflow is relatively high among those of a similar size to WCP.
Among large caps, we should pay attention to L&amp;F, Posco Chemical, and Iljin Materials. However, we should be cautious about approaching them as an active trading target.


TIGER (WISE) Secondary Battery ETF Rebalancing in January: Names to Watch

<ul>
<li>As expected, Sungeel Hitech (365340) made it to the index. And C&amp;I System (222080) and Wonik PNE (217820) were added, whereas Ecopro (086520) and Dongwha Enterprise (025900) were deleted.</li>
<li>Among the existing constituents, Samsung SDI (006400), Ecopro BM (247540), SK Innovation (096770), L&amp;F (066970), and SKC (011790) are expected to have a relatively significant impact.</li>
<li>Looking at the last rebalancing, the impact/price correlation was most significant on Day 1. So, we should consider aiming for LONG/SHORT today for those with a high relative impact.</li>
</ul>


As expected, Sungeel Hitech (365340) made it to the index. And C&amp;I System (222080) and Wonik PNE (217820) were added, whereas Ecopro (086520) and Dongwha Enterprise (025900) were deleted.
Among the existing constituents, Samsung SDI (006400), Ecopro BM (247540), SK Innovation (096770), L&amp;F (066970), and SKC (011790) are expected to have a relatively significant impact.
Looking at the last rebalancing, the impact/price correlation was most significant on Day 1. So, we should consider aiming for LONG/SHORT today for those with a high relative impact.


KODEX Battery Rebalancing Results Out: From Today to Next Tuesday

South Korea

LS Corp is a holding company, which operated subsidiaries including LS Industrial Systems, LS Cable, LS-Nikko Copper and LS Mtron.

Hyosung Heavy Industries Corporation manufactures electrical power equipment. The Company produces and sells transformers, generators, and other related products. Hyosung Heavy Industries markets its products worldwide.

Hyosung Heavy Industries Corp (298040 KS)

Taihan Electric Wire Co., Ltd. manufactures a wide range of cables and wires, such as power, communications, copper rod, and enameled cables and wires.  The Company also produces stainless steel sheets and aluminum products including coils, sheets, and plates.  In addition, Taihan Electric offers information and communications equipment, such as optical transmission and network systems.

LS Electric Co., Ltd. manufactures and distributes electrical power equipment. The Company produces smart power equipment, smart automation equipment, smart railway equipment, and other related products. LS Electric also develops smart grid, micro grid, energy storage systems, and metal products.

CS Wind Corporation operates as a wind tower company. The Company manufactures and exports steel wind towers, while also offering aluminum platforms for wind towers. CS Wind extends its products and services globally.

Iljin Electric Co Ltd manufactures and sells electric products.  The Company's products include electric fittings, distribution lines, electrical equipment, and automated power distribution systems.  Iljin also builds power cable systems and produces aluminum casting products used in automobiles.  Through its subsidiaries, the Company operates communications and financial businesses.

Shinsung Delta Tech Co., Ltd. manufactures electronic components. The company's product includes control panel, top cover, drum tub, and blower for washing machine and air conditioner.  The Company also produces automobile part and light guide panel for Thin Film Transistor-Liquid Crystal Display (TFT-LCD).

Cheryong Electric Co., Ltd. manufactures and sells steel support equipment and components used for power supply and transmission.  The Company also produces transformers and synthetic resin products, including electric wire covering.

Korea Electric Terminal Co., Ltd. specializes in manufacturing a wide range of connectors used in automobiles, home appliances, and telecommunications devices, The Company also produces fiber-optic products, such as jumper cord assemblies, attenuators, couplers, and multiplexers.

SPG Co., Ltd, manufactures various types of industrial motors.  The Company's main products are induction motors, reversible motors, electromagnetic motors, shaded pole motors, and condenser run motors.

Shanghai Electric Group Company Limited manufactures power generation equipment. The Company produces and sells thermal generator set, nuclear power units, wind power equipment, power transmission and distribution equipment, and other products. Shanghai Electric Group also manufactures environmental protection equipment.

Shanghai Electric Group Company (601727 CH)

Henan Pinggao Electric Co., Ltd. manufactures and markets electrical equipment. The Company produces high pressure plates, high voltage equipment, circuit breakers, switches, insulated switchgears, and other products. Henan Pinggao Electric also operates import and export businesses.

Teco Electric & Machinery Co., Ltd. manufactures household appliances, industrial motors, and smart cards.  The Company produces air conditioners, refrigerators, washing machines, televisions, dryers, single-phase motors, three-phase motors, inverters, rotary compressors, stepping motors, gear motors, and generators.

V-Guard Industries Limited produces and manufacturers stabilizers, pumps, cables, fans, and electrical and solar water heaters.

Shanghai Zhixin Electric Co., Ltd. manufactures and markets electric equipment, including bus line slots, switch boxes, transformers, electric cables, and other related products.

Shanghai Zhixin Electric Co, Ltd. (600517 CH)

Amara Raja Batteries Limited specializes in the manufacture of industrial and automotive batteries. The Company manufactures industrial batteries primarily for the telecom and UPS sectors. Amara Raja manufactures automotive batteries for the original equipment manufacturers and the aftermarket.

Guangdong HuaSheng Electrical Appliances Company Limited develops, produces and sells wiring components for household appliances. The Company's main products include air-conditioning components and power input components for household appliances.

Guangdong Huasheng Elctrcl Aplncs (002670 CH)

Finolex Cables Ltd. manufactures a wide range of telecommunication and electrical cables. The Company's products include flexible cables for appliances and industrial use electrification, winding wires, automobile cables, welding cables, and cables for submersible pumps. The Company also manufactures jelly filled phone cables, high frequency/radio frequency cables and PVC Sheets.

Xi'an Qiyuan Mechanical and Electrical Equipment Company Limited designs, develops, manufactures, sells and provides services for transformer equipment and components. The Company's main products includes iron core cutting equipment, routing equipment, transformer tank equipment, insulator processing equipment, tooling equipments and radiators etc.

Xian Qiyuan Mchncl And Elctcl Eqp (300140 CH)

Qingdao TGOOD Electric Co Ltd designs and manufactures electrical transformers and provides related technical services.  The Company also provides system solutions for the electrical transformer substations.

L&F Co., Ltd. develops and manufactures battery materials. The Company produces and sells cathode active materials, anode materials, electrolyte, separator, and other products. L&F markets its products throughout Korea.

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L&F (066970 KS)

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Sanghyun Park

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This post projects the rebalanced weights and resulting passive impacts in the upcoming TIGER (WISE) Secondary Battery ETF rebalancing.

Sanghyun Park

KODEX Battery Rebalancing Results Out: From Today to Next Tuesday

This post details the rebalancing results and resulting passive impacts of the KODEX Secondary Battery ETF, which runs from today to next Tuesday.

Sanghyun Park

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