Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

<ul>
<li>The Korean government removed mask mandates for public transportation in Korea as of Monday, 20 March including in buses, taxis, and subways.</li>
<li>There are four major reasons why it will take much longer time for most people in Korea to stop wearing masks. </li>
<li>As millions of people stop wearing masks in the coming year, there will be clear, visible higher demand for cosmetics, which should benefit companies such as Korea Kolmar. </li>
</ul>


The Korean government removed mask mandates for public transportation in Korea as of Monday, 20 March including in buses, taxis, and subways.
There are four major reasons why it will take much longer time for most people in Korea to stop wearing masks. 
As millions of people stop wearing masks in the coming year, there will be clear, visible higher demand for cosmetics, which should benefit companies such as Korea Kolmar. 


Korea Kolmar: When Will People in Korea Stop Wearing Masks?

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>Many of the PREFERRED shares in Korea entered the short-term oversold territory versus ORDINARY (on a 20-day moving average).</li>
<li>The liquidity boom that started in the local bond market at the beginning of the year seems to have led to the relative outperformance of ORDINARY.</li>
<li>We should consider collective trading, which utilizes the oversold condition across the entire PREF zone, rather than an individual approach to a specific PREF at this point.</li>
</ul>


Many of the PREFERRED shares in Korea entered the short-term oversold territory versus ORDINARY (on a 20-day moving average).
The liquidity boom that started in the local bond market at the beginning of the year seems to have led to the relative outperformance of ORDINARY.
We should consider collective trading, which utilizes the oversold condition across the entire PREF zone, rather than an individual approach to a specific PREF at this point.


Discussing the Currently Widened Pref-Ord Disparity in Korea

<ul>
<li>This year is less intense compared to previous years. However, given this year's overall market returns and the lower visibility of yearend dividends, it is still a reasonably aggressive flow.</li>
<li>Most of this PROP flow should have been dividend hunting aimed at the distortion of ex-date price correction caused by RETAIL's tax avoidance-driven selling flow.</li>
<li>The performance of the individual stock position strategy (entering on T-4~1 ex-date) might not have been as juicy as expected, but it still managed to deliver a positive return.</li>
</ul>


This year is less intense compared to previous years. However, given this year's overall market returns and the lower visibility of yearend dividends, it is still a reasonably aggressive flow.
Most of this PROP flow should have been dividend hunting aimed at the distortion of ex-date price correction caused by RETAIL's tax avoidance-driven selling flow.
The performance of the individual stock position strategy (entering on T-4~1 ex-date) might not have been as juicy as expected, but it still managed to deliver a positive return.


Retrospectively Reviewing Prop Traders Vs. Retail on T±4 Ex-Date

<ul>
<li>We believe that there is finally some light showing at the end of the dark tunnel for the two leading Korean cosmetics companies LG H&amp;H and Amorepacific Corp.</li>
<li>These two stocks have underperformed the market in the past year but have started to outperform the market in the past three weeks. </li>
<li>There are credible signs that indoor mask wearing in Korea will be eliminated in Korea on/near March 2023 and that the inbound visitors to Korea will continue to increase significantly.</li>
</ul>


We believe that there is finally some light showing at the end of the dark tunnel for the two leading Korean cosmetics companies LG H&amp;H and Amorepacific Corp.
These two stocks have underperformed the market in the past year but have started to outperform the market in the past three weeks. 
There are credible signs that indoor mask wearing in Korea will be eliminated in Korea on/near March 2023 and that the inbound visitors to Korea will continue to increase significantly.


Light at the End of the Dark Tunnel for Korean Cosmetics?

Cross Asset Strategy

<ul>
<li>In the past several days, one of the biggest news in Asia has been whether the Chinese government may be willing to change its stance on the zero COVID policies.</li>
<li>So far, the Chinese government has not proclaimed any official statement on ending the zero COVID policies. </li>
<li>Although we do not have a crystal ball on the Chinese government's COVID policies, there are increasing probabilities of a major loosening the COVID restrictions in China next year.</li>
</ul>


In the past several days, one of the biggest news in Asia has been whether the Chinese government may be willing to change its stance on the zero COVID policies.
So far, the Chinese government has not proclaimed any official statement on ending the zero COVID policies. 
Although we do not have a crystal ball on the Chinese government's COVID policies, there are increasing probabilities of a major loosening the COVID restrictions in China next year.


China's Zero COVID Policy: Confusions Remain on Exact Reopening Timeline - Impact on Korean Stocks

South Korea

LG H&H Co., Ltd. manufactures and distributes cosmetics. The Company produces whoo, o hui, sum 37, basic cosmetics, color cosmetics, and other related products. LG H&H also produces toothpaste, soap, detergents, healthy, personal care, and refreshing products.

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LG H&H (Pref) (051905 KS)

Korea Kolmar: When Will People in Korea Stop Wearing Masks?

As millions of people stop wearing masks in the coming year, there will be clear, visible higher demand for cosmetics, which should benefit...

Douglas Kim

Discussing the Currently Widened Pref-Ord Disparity in Korea

This post discusses the reasons behind Korea's currently widened preferred-ordinary disparity and suggests trading approaches.

Sanghyun Park

Retrospectively Reviewing Prop Traders Vs. Retail on T±4 Ex-Date

This post retrospectively reviews the Prop Traders Vs. Retail buying/selling dynamics on T±4 ex-date and discusses resulting implications.

Sanghyun Park

Light at the End of the Dark Tunnel for Korean Cosmetics?

We believe that there is finally some light showing at the end of the dark tunnel for the two leading Korean cosmetics companies LG H&H and...

Douglas Kim

China's Zero COVID Policy: Confusions Remain on Exact Reopening Timeline - Impact on Korean Stocks

As a result of news of China potentially reopening its economy with reduced COVID restrictions sometime in 2023, the major reopening plays in Korea...

Douglas Kim

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