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>FnGuide Battery Index overlaps with the rebalancing of the KRX K-New Deal. K-New Deal is March 11. As for FnGuide Battery, it will be three trading days on March 14-16.</li>
<li>Among the top-cap stocks, Samsung SDI will be the biggest beneficiary, and we need to consider a setup that utilizes Samsung SDI as a long/short partner for LG Chem.</li>
<li>LG Chem's staying significant distorts mid-caps' index weight in KRX Battery. The extent of passive outflows would be pretty substantial. So, outright short these mid-caps should deserve our attention.</li>
</ul>


FnGuide Battery Index overlaps with the rebalancing of the KRX K-New Deal. K-New Deal is March 11. As for FnGuide Battery, it will be three trading days on March 14-16.
Among the top-cap stocks, Samsung SDI will be the biggest beneficiary, and we need to consider a setup that utilizes Samsung SDI as a long/short partner for LG Chem.
LG Chem's staying significant distorts mid-caps' index weight in KRX Battery. The extent of passive outflows would be pretty substantial. So, outright short these mid-caps should deserve our attention.


FnGuide & KRX K-New Deal Batteries: Combined Passive Flows Preview on March 10-15

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

<ul>
<li>In this insight, we discuss the potential additions and deletions in the upcoming June 2022 KOSPI200 rebalance.</li>
<li>These top 10potential inclusionsare down on average 4.4% YTD, outperforming KOSPI which is down 10.1% YTD.</li>
<li>These top 10 potential exclusions are down on average 12.3% YTD, underperforming KOSPI which is down 10.1% YTD.</li>
</ul>


In this insight, we discuss the potential additions and deletions in the upcoming June 2022 KOSPI200 rebalance.
These top 10potential inclusionsare down on average 4.4% YTD, outperforming KOSPI which is down 10.1% YTD.
These top 10 potential exclusions are down on average 12.3% YTD, underperforming KOSPI which is down 10.1% YTD.


Initial Thoughts on the KOSPI200 Rebalance in June 2022

<ul>
<li>KODEX doing LG Energy/LG Chem rebalancing over ten trading days for two reasons: 1. minimize the impact on LG Chem and 2. reduce the yield gap with TIGER.</li>
<li>We need to keep an eye on the possibility that KODEX will complete its LG Energy/LG Chem rebalancing schedule earlier than the full ten trading days.</li>
<li>Of course, this is also a risky trading approach. But considering the current share prices of LG Energy and LG Chem, there is sufficient circumstantial probability to support this.</li>
</ul>


KODEX doing LG Energy/LG Chem rebalancing over ten trading days for two reasons: 1. minimize the impact on LG Chem and 2. reduce the yield gap with TIGER.
We need to keep an eye on the possibility that KODEX will complete its LG Energy/LG Chem rebalancing schedule earlier than the full ten trading days.
Of course, this is also a risky trading approach. But considering the current share prices of LG Energy and LG Chem, there is sufficient circumstantial probability to support this.


KODEX Playing a Risky Game on LG Energy/LG Chem Rebalancing & Any Trading Opportunity from It?

Cross Asset Strategy

<ul>
<li>There are two key, positive catalysts for major Korean holding companies that could result in these stocks outperforming the market in the coming months.</li>
<li>The first main catalyst is that the two leading presidential candidates are both have campaign pledges to protect minority shareholders when conglomerates conduct physical division spin-offs/splits. </li>
<li>The second key catalyst is the shift from growth to value stocks amid heightened market volatility.</li>
</ul>


There are two key, positive catalysts for major Korean holding companies that could result in these stocks outperforming the market in the coming months.
The first main catalyst is that the two leading presidential candidates are both have campaign pledges to protect minority shareholders when conglomerates conduct physical division spin-offs/splits. 
The second key catalyst is the shift from growth to value stocks amid heightened market volatility.


Two Key Positive Catalysts for Major Korean Holding Companies

<ul>
<li>For KODEX (FnGuide), the actual rebalancing trading must have begun yesterday, Feb 8, and runs until Feb 22, presumably at an equal daily weighting.</li>
<li>TIGER (WISE) announced that its implementation of LG Energy IN/LG Chem OUT was completed as of the end of yesterday.</li>
<li>As for the daily passive impact from KODEX until Feb 22, LG Energy is expected to receive an inflow of 0.03x DTV, whereas LG Chem's outflow should be -0.10x ADTV.</li>
</ul>


For KODEX (FnGuide), the actual rebalancing trading must have begun yesterday, Feb 8, and runs until Feb 22, presumably at an equal daily weighting.
TIGER (WISE) announced that its implementation of LG Energy IN/LG Chem OUT was completed as of the end of yesterday.
As for the daily passive impact from KODEX until Feb 22, LG Energy is expected to receive an inflow of 0.03x DTV, whereas LG Chem's outflow should be -0.10x ADTV.


LG Energy IN/LG Chem OUT: TIGER (WISE) Done on Feb 8 & KODEX (FnGuide) Under Progress Until Feb 22

South Korea

LG Energy Solution produces and sells batteries. The Company manufactures and sells automobile batteries, small batteries, energy storage system batteries, and other products. LG Energy Solution markets its products worldwide.

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LG Energy Solution (373220 KS)

FnGuide & KRX K-New Deal Batteries: Combined Passive Flows Preview on March 10-15

This post estimates the combined passive flows of Korea's local battery stocks from the rebalancings of the FnGuide Battery Index and the KRX K-New...

Sanghyun Park

Initial Thoughts on the KOSPI200 Rebalance in June 2022

We discuss the potential additions and deletions in the upcoming June 2022 KOSPI200 rebalance. Top 10 potential inclusions are down on average 4.4%...

Douglas Kim

KODEX Playing a Risky Game on LG Energy/LG Chem Rebalancing & Any Trading Opportunity from It?

This post examines the game that KODEX is playing with the LG Energy/LG Chem rebalancing and potential trading opportunities from this situation.

Sanghyun Park

Two Key Positive Catalysts for Major Korean Holding Companies

There are two key, positive catalysts for major Korean holding companies that could result in these stocks outperforming the market in the coming...

Douglas Kim

LG Energy IN/LG Chem OUT: TIGER (WISE) Done on Feb 8 & KODEX (FnGuide) Under Progress Until Feb 22

As for the local ETFs' LG Energy IN/LG Chem OUT trading, TIGER (WISE) was completed yesterday, whereas KODEX (FnGuide) began yesterday and runs...

Sanghyun Park

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