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>Among Korea's local metaverse ETFs, the Big Three have significant AUMs. At yesterday's closing prices, their AUMs are ₩0.41T, ₩0.40T, and ₩0.20T, respectively. Their total is now 1 trillion won.</li>
<li>Those on which we can perform stable momentum trading are the 14 stocks included in all three ETFs. Passive funds account for +3% of MC in half of these names.</li>
<li>Weighting adjustment uses keyword relevance. So, estimation is not easy. Nevertheless, since the absolute value does not change significantly, we can reduce the error by using the previous rebalancing weighting.</li>
</ul>


Among Korea's local metaverse ETFs, the Big Three have significant AUMs. At yesterday's closing prices, their AUMs are ₩0.41T, ₩0.40T, and ₩0.20T, respectively. Their total is now 1 trillion won.
Those on which we can perform stable momentum trading are the 14 stocks included in all three ETFs. Passive funds account for +3% of MC in half of these names.
Weighting adjustment uses keyword relevance. So, estimation is not easy. Nevertheless, since the absolute value does not change significantly, we can reduce the error by using the previous rebalancing weighting.


Korea Local Metaverse ETFs: Passive Flow Preview

<ul>
<li>For this March rebalancing, the screening base date is January 28, which is the last trading day of January. So, the 3-month rebalancing review period is now done.</li>
<li>Other than LG Energy (+₩146,2B), we should pay the most attention to AfreecaTV (+1.70x), Chunbo (+0.36x), Douzone Bizon (-4.82x), and SoulBrain (-0.99x).</li>
<li>In addition, large-cap stocks such as SKIET (+0.25x), Ecopro BM (+0.10x), LG Chem (-0.62x), and Posco Chemical (-0.30x) will likely draw much attention.</li>
</ul>


For this March rebalancing, the screening base date is January 28, which is the last trading day of January. So, the 3-month rebalancing review period is now done.
Other than LG Energy (+₩146,2B), we should pay the most attention to AfreecaTV (+1.70x), Chunbo (+0.36x), Douzone Bizon (-4.82x), and SoulBrain (-0.99x).
In addition, large-cap stocks such as SKIET (+0.25x), Ecopro BM (+0.10x), LG Chem (-0.62x), and Posco Chemical (-0.30x) will likely draw much attention.


KRX K-New Deal Index Screening Period Ended: Rebalancing Changes & Passive Impacts Update

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

<ul>
<li>In the earnings conference today, NCsoft stated that the company plans to launch a blockchain, NFT based game in 2022, which was the biggest highlight in the earnings conference call.</li>
<li>NCsoft reported slightly worse than expected results in 3Q 2021. Despite these results, the market chose to focus on NCsoft's push into the blockchain, NFT based games. </li>
<li>The entire Korean game industry could be re-rated in the coming weeks, bolstered by the ability to capture new markets and customers through the blockchain, NFT based games. </li>
</ul>


In the earnings conference today, NCsoft stated that the company plans to launch a blockchain, NFT based game in 2022, which was the biggest highlight in the earnings conference call.
NCsoft reported slightly worse than expected results in 3Q 2021. Despite these results, the market chose to focus on NCsoft's push into the blockchain, NFT based games. 
The entire Korean game industry could be re-rated in the coming weeks, bolstered by the ability to capture new markets and customers through the blockchain, NFT based games. 


NCsoft - Launch of Blockchain, NFT Based Game [Re-Rating of the Entire Game Sector in Korea?]

<h2>M&amp;A of Lionheart Studio by Kakao Games Corp </h2>In this insight, we discuss the increasing likelihood of an IPO of Lionheart Studio post its controlling stake purchase by <a href="https://www.smartkarma.com/entities/kakao-games-corp" target="_blank" data-smartkarma-citation="entities:26730:1" rel="noopener">Kakao Games Corp (293490 KS)</a>.  Kakao Games first made its investment in Lionheart Studio in May 2020 and the partnership between the two companies started in August 2018. On 1 November, <a href="https://pulsenews.co.kr/view.php?year=2021&amp;no=1033976" target="_blank" rel="noopener">Kakao Games</a> announced that it will acquire an additional 30.37% stake in Lionheart Studio Corp, raising its total stake to 52%.Lionheart Studio is well known for its blockbuster mobile game Odin: Valhalla Rising which was launched in Korea in June 2021 and it was ranked as the top grossing mobile game for 18 weeks in a row at Apple and Google Play app stores in Korea. Kakao Games Corp's subsidiary Kakao Games Europe B.V. will acquire a 30.37% stake in Lionheart Studio by paying 450 billion won for this stake. Lionheart Studio is now valued at 1.5 trillion won. The upfront payment for this acquisition will be made on November 23, 2021. The final acquisition amount will be finalized after Lionheart Studio provides its final business performance through June 30, 2022. Overall, we believe that this M&amp;A of Lionheart Studio and the potential IPO of Lionheart Studio will likely have a positive impact on Kakao Games Corp shares as the company's Odin: Valhalla Rising mobile game has been so successful in reaching top market share for mobile games in Korea.

M&amp;A of Lionheart Studio by Kakao Games Corp In this insight, we discuss the increasing likelihood of an IPO of Lionheart Studio post its controlling stake purchase by Kakao Games Corp (293490 KS).  Kakao Games first made its investment in Lionheart Studio in May 2020 and the partnership between the two companies started in August 2018. On 1 November, Kakao Games announced that it will acquire an additional 30.37% stake in Lionheart Studio Corp, raising its total stake to 52%.Lionheart Studio is well known for its blockbuster mobile game Odin: Valhalla Rising which was launched in Korea in June 2021 and it was ranked as the top grossing mobile game for 18 weeks in a row at Apple and Google Play app stores in Korea. Kakao Games Corp's subsidiary Kakao Games Europe B.V. will acquire a 30.37% stake in Lionheart Studio by paying 450 billion won for this stake. Lionheart Studio is now valued at 1.5 trillion won. The upfront payment for this acquisition will be made on November 23, 2021. The final acquisition amount will be finalized after Lionheart Studio provides its final business performance through June 30, 2022. Overall, we believe that this M&amp;A of Lionheart Studio and the potential IPO of Lionheart Studio will likely have a positive impact on Kakao Games Corp shares as the company's Odin: Valhalla Rising mobile game has been so successful in reaching top market share for mobile games in Korea. 

M&A and IPO of Lionheart Studio & Put Option Clause for Its Executives - Impact on Kakao Games

Thematic (Sector/Industry)

There were four new<a href="http://www.koreaherald.com/view.php?ud=20211013001007" target="_blank" rel="noopener"> metaverse related ETFs</a> were launched in Korea on 13 October for the first time ever in the Korean stock market. The first three ETFs (KBSTAR iSelect Metaverse, Hanaro Fn K-Metaverse MZ, and Tiger Fn Metaverse) are passive funds. KODEX K-Metaverse Active is an active fund. These four new ETFs are as follows:1) Tiger Fn Metaverse (managed by Mirae Asset Global Investment)2) KBSTAR iSelect Metaverse (managed by KB Asset Management)3) Hanaro Fn K-Metaverse MZ (managed by NH Amundi Asset Management)4) KODEX K-Metaverse Active  (managed by Samsung Asset Management)The stocks that are included in these metaverse related names also tend to be higher beta ones that could perform much better in a rising market environment. However, because these stocks tend to be higher beta stocks with high valuation multiples, it could be challenging for these stocks to outperform the market when the market downturn occurs.

There were four new metaverse related ETFs were launched in Korea on 13 October for the first time ever in the Korean stock market. The first three ETFs (KBSTAR iSelect Metaverse, Hanaro Fn K-Metaverse MZ, and Tiger Fn Metaverse) are passive funds. KODEX K-Metaverse Active is an active fund. These four new ETFs are as follows:1) Tiger Fn Metaverse (managed by Mirae Asset Global Investment)2) KBSTAR iSelect Metaverse (managed by KB Asset Management)3) Hanaro Fn K-Metaverse MZ (managed by NH Amundi Asset Management)4) KODEX K-Metaverse Active  (managed by Samsung Asset Management)The stocks that are included in these metaverse related names also tend to be higher beta ones that could perform much better in a rising market environment. However, because these stocks tend to be higher beta stocks with high valuation multiples, it could be challenging for these stocks to outperform the market when the market downturn occurs. 

Listing of 4 New Metaverse Related ETFs in Korea

South Korea

Pearl Abyss Corp. operates as a computer games making company. The Company offers games development, games exporting, and other services. Pearl Abyss serves customers worldwide.

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Pearl Abyss (263750 KS)

Korea Local Metaverse ETFs: Passive Flow Preview

This post tracks and previews the passive flows of Korea's three metaverse sector ETFs for the upcoming semi-annual rebalancing in June.

Sanghyun Park

KRX K-New Deal Index Screening Period Ended: Rebalancing Changes & Passive Impacts Update

The KRX K-New Deal Index's screening period ended last Friday. This post updates the screening results and passive impacts.

Sanghyun Park

NCsoft - Launch of Blockchain, NFT Based Game [Re-Rating of the Entire Game Sector in Korea?]

In the earnings conference today, NCsoft stated that the company plans to launch a blockchain, NFT based game in 2022, which was the biggest...

Douglas Kim

M&A and IPO of Lionheart Studio & Put Option Clause for Its Executives - Impact on Kakao Games

In this insight, we discuss the increasing likelihood of an IPO of Lionheart Studio post its controlling stake purchase by Kakao Games Corp (293490...

Douglas Kim

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