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

We know that the Korea National Pension Service (NPS) is the nation's largest institutional investor, responsible for about 7% of the local equity market. But we often overlook the fact that it is also one of the largest institutional investors in the global coal industry.According to the joint report by several environmental organizations, including Urgewald and Reclaim France, the NPS is, in fact, the world's 11th-largest investor in the coal industry. The NPS currently invests ₩12.7T in total on the coal-related bonds and equity, of which ₩4T are invested in equity.There is news that the NPS will introduce a negative screening on the coal investment as early as the second half of this year.The upcoming Fund Management Committee meeting, chaired by the Minister of Health and Welfare of South Korea, is scheduled for April 30. It is the highest-level investment decision-making body within the NPS. The negative screening is officially one of the proposals to be discussed in the April 30 meeting.The Korea NPS governance structure<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/203/038/original/1.png?1619531424" class="editor-image img-responsive" data-smartkarma-image-id="203038"></figure></section><div class="content-caption">(Courtesy Korea NPS)</div>The chances are pretty high, given the current political mood under the left-winged administration. Coal will be a starter, likely followed by tobacco and mass destruction weapons soon.

We know that the Korea National Pension Service (NPS) is the nation's largest institutional investor, responsible for about 7% of the local equity market. But we often overlook the fact that it is also one of the largest institutional investors in the global coal industry.According to the joint report by several environmental organizations, including Urgewald and Reclaim France, the NPS is, in fact, the world's 11th-largest investor in the coal industry. The NPS currently invests ₩12.7T in total on the coal-related bonds and equity, of which ₩4T are invested in equity.There is news that the NPS will introduce a negative screening on the coal investment as early as the second half of this year.The upcoming Fund Management Committee meeting, chaired by the Minister of Health and Welfare of South Korea, is scheduled for April 30. It is the highest-level investment decision-making body within the NPS. The negative screening is officially one of the proposals to be discussed in the April 30 meeting.The Korea NPS governance structure(Courtesy Korea NPS)The chances are pretty high, given the current political mood under the left-winged administration. Coal will be a starter, likely followed by tobacco and mass destruction weapons soon.

Shorting Alert Amid Korea NPS Negative Screening on Coal: KEPCO, GS, OCI, Kumho P, LG Int, & POSCO

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Cross Asset Strategy

<div class="content-highlight">
On 9 April, the <a href="https://www.reuters.com/article/southkorea-nps/update-1-s-koreas-pension-fund-adjusts-rules-to-raise-domestic-equity-allocation-idUSL1N2M20EN" target="_blank" rel="noopener">NPS</a> announced that it will change rules to increase the allocation of Korean stocks, which would be the first time in a decade. This adjustment could be implemented starting next week. This change comes after a lot of pressure by the retail investors.
NPS increased the strategic asset allocation (SAA) limit for domestic equities from the current 2% to 3%, increasing the percentage of Korean stocks it can hold from the current band of 14.8% -18.8% (+/- 2% with 16.8% as base) to 13.8% -19.8% (+/- 3% with 16.8% as base). NPS's target of the domestic equity allocation is 16.8% (of total fund amount). As a result of this change, the sale of domestic stocks by the NPS is expected to slow down.
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On 9 April, the NPS announced that it will change rules to increase the allocation of Korean stocks, which would be the first time in a decade. This adjustment could be implemented starting next week. This change comes after a lot of pressure by the retail investors.
NPS increased the strategic asset allocation (SAA) limit for domestic equities from the current 2% to 3%, increasing the percentage of Korean stocks it can hold from the current band of 14.8% -18.8% (+/- 2% with 16.8% as base) to 13.8% -19.8% (+/- 3% with 16.8% as base). NPS's target of the domestic equity allocation is 16.8% (of total fund amount). As a result of this change, the sale of domestic stocks by the NPS is expected to slow down.


The last day to be eligible to receive the first quarter dividends is March 29, next Monday.The div payment is May 20.









Quarterly div schedule for FY2021
1Q
2Q
3Q
4Q


The last day to be eligible
3/29
6/28
9/28
12/28


Ex-div
3/30
6/29
9/29
12/29


Div record
3/31
6/30
9/30
12/30


Div payment (tentative)
5/20
8/20
11/18
4/20 (2022)

Source: KRX

We have four quarterly div stocks on KOSPI 200: POSCO, Samsung Electronics, Ssangyong Cement Industry, and Hanon Systems.The quarterly div yields range from 0.37% (Hanon Systems) to 1.60% (Ssangyong Cement Industry) based on the FnGuide consensus, which is pretty much in line with the previous year.









1Q dividend stocks
Ticker
1Q div (est.)
Yearly div (est.)
Quarterly div yield


POSCO
005490
₩2,000
₩9,500
0.65%


Samsung Electronics Co Ltd
005930
₩361
₩1,443
0.44%


Ssangyong Cement Industry Co Ltd
003410
₩110
₩440
1.60%


Hanon Systems
018880
₩68
₩320
0.37%


Source: FnGuide



Now, let's check potential short recovering for these div stocks.For this, it is crucial to check the loaned stock balance and 52W performance.On KOSPI, Doosan Infracore is leading at 19.51% of SO.The four div stocks do not carry a lot in their balance: 1.95% POSCO, 1.16% SamE, 0.95% Ssangyong Cement Ind, and 0.89% Hanon Systems.









Loaned stock balance (KOSPI)
Ticker
Balance
% of SO
MC (₩B)


Doosan Infracore Co Ltd
042670
42,246,502
19.51%
2,053.0


Cosmax Inc
192820
1,837,956
18.29%
1,216.0


DL Holdings Co Ltd
000210
2,798,553
18.12%
1,336.8


Lotte Tour Development Co., Ltd.
032350
10,031,962
14.48%
1,305.8


LG HAUSYS, LTD.
108670
1,080,271
12.05%
722.8


LG Display Co Ltd
034220
32,306,260
9.03%
7,961.4


Hotel Shilla Co Ltd
008770
3,527,067
8.99%
3,441.6


Kyeryong Construction Industrial Co.
013580
719,601
8.06%
275.5


Samsung Heavy Industries Co., Ltd
010140
47,943,664
7.61%
4,263.6


Celltrion, Inc.
068270
9,330,378
7.49%
39,968.2


HMM Co Ltd
011200
23,377,269
7.07%
9,724.4


Hana Tour Service Inc
039130
947,217
6.80%
939.5


NS Shopping Co Ltd
138250
2,221,727
6.59%
394.2


Inscobee Inc
006490
6,225,990
6.07%
364.9


Wooridul Pharmaceutical Ltd
004720
838,212
5.70%
134.2


CJ Logistics Corp
000120
1,240,086
5.44%
3,992.2


Netmarble Corp
251270
4,580,308
5.33%
10,656.6


Jahwa Electronics Co Ltd
033240
939,220
5.25%
308.8


GS Retail Co Ltd
007070
3,969,424
5.16%
2,979.9



POSCO
005490
1,699,950
1.95%
26,722.8


Samsung Electronics Co Ltd
005930
69,482,398
1.16%
545,145.9


Ssangyong Cement Industry Co Ltd
003410
4,762,928
0.95%
3,466.6


Hanon Systems
018880
4,751,149
0.89%
9,741.9

Source: KOFIA

Similarly, all of them stay near 52WH. There is no sign of being oversold.









Name
Ticker
MC (₩B)
x 52WH
52WH date


Ssangyong Cement Industry Co Ltd
003410
3,466.6
0.93
12/11/20


POSCO
005490
26,722.8
0.92
3/9/21


Hanon Systems
018880
9,795.2
0.91
1/8/21


Samsung Electronics Co Ltd
005930
485,940.3
0.84
1/11/21

Source: KRX



KOSPI 200 1Q Quarterly Div Stocks: Status Check

Equity Capital Markets

<div class="content-highlight">The <a href="https://www.smartkarma.com/entities/coupang" target="_blank" data-smartkarma-citation="entities:28425:1" rel="noopener">Coupang (CPNG US)</a> IPO has been one of the most successful IPOs for a company whose operations are mainly in Korea. There are likely to be a lot more Korean based companies (both public and private) that will consider listing their shares in the US market after a hugely successfully Coupang IPO. In this insight, we discuss 14 major Korean companies that may try to list their shares in the US exchanges in the next several years in order to reduce the infamous "Korea discount."</div>14 Korean Companies That May List Their Shares in the US Stock Exchange:<a href="https://www.smartkarma.com/entities/samsung-electronics-co-ltd" target="_blank" data-smartkarma-citation="entities:191:1" rel="noopener">1) Samsung Electronics (005930 KS)</a>2) Kurly (Private)3) SmartStudy (Private)4) Naver Webtoon (Private) 5) Krafton (Private) 6) LG Energy Solution (Private) 7) 11st (Private) 8) SSG.com (Private) 9) <a href="https://www.smartkarma.com/entities/ncsoft-corp" target="_blank" data-smartkarma-citation="entities:5169:1" rel="noopener">NCSOFT Corp (036570 KS)</a>10) <a href="https://www.smartkarma.com/entities/naver-corp" target="_blank" data-smartkarma-citation="entities:16029:1" rel="noopener">Naver Corp (035420 KS)</a>11) Kakao Entertainment (Private)  12) <a href="https://www.smartkarma.com/entities/kakao-corp" target="_blank" data-smartkarma-citation="entities:15002:1" rel="noopener">Kakao Corp (035720 KS)</a>13) Tmon (Private) 14) Non private equity firm that acquires Ebay Korea

The Coupang (CPNG US) IPO has been one of the most successful IPOs for a company whose operations are mainly in Korea. There are likely to be a lot more Korean based companies (both public and private) that will consider listing their shares in the US market after a hugely successfully Coupang IPO. In this insight, we discuss 14 major Korean companies that may try to list their shares in the US exchanges in the next several years in order to reduce the infamous "Korea discount."14 Korean Companies That May List Their Shares in the US Stock Exchange:1) Samsung Electronics (005930 KS)2) Kurly (Private)3) SmartStudy (Private)4) Naver Webtoon (Private) 5) Krafton (Private) 6) LG Energy Solution (Private) 7) 11st (Private) 8) SSG.com (Private) 9) NCSOFT Corp (036570 KS)10) Naver Corp (035420 KS)11) Kakao Entertainment (Private)  12) Kakao Corp (035720 KS)13) Tmon (Private) 14) Non private equity firm that acquires Ebay Korea 

Top 14 Korean Companies That May List in the US Stock Exchanges - Close The "Korea Discount Gap"

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

The number of major country indexes showing major bullish inflections continues to grow. Broad commodities (Bloomberg Commodity index) also display a bullish reversal topside a 12.5-year downtrend. This type of evidence helps affirm our bullish outlook and suggests higher prices are ahead. Continue to add exposure on pullbacks.

The number of major country indexes showing major bullish inflections continues to grow. Broad commodities (Bloomberg Commodity index) also display a bullish reversal topside a 12.5-year downtrend. This type of evidence helps affirm our bullish outlook and suggests higher prices are ahead. Continue to add exposure on pullbacks.

Long-Term Bullish Inflections For Hang Seng, DAX, MSCI EM, & Bloomberg Commodity Index

South Korea

POSCO Holdings Inc. manufactures and distributes steel products. The Company produces crude steel, hot rolled steel, cold rolled steel, stainless steel, steel plates, wire rods, galvanized steel, electrical steel, and other related products. POSCO Holdings markets its products worldwide.

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POSCO Holdings (005490 KS)

Shorting Alert Amid Korea NPS Negative Screening on Coal: KEPCO, GS, OCI, Kumho P, LG Int, & POSCO

This post looks at the NPS-owned coal-heavy local stocks that will likely be subject to the NPS negative screening on coal.

Sanghyun Park

NPS Raises Domestic Equity Allocations

NPS increased the strategic asset allocation (SAA) limit for domestic equities from the current 2% to 3%. As a result of this change, the sale of...

Douglas Kim

KOSPI 200 1Q Quarterly Div Stocks: Status Check

This post examines potential short recovering and spot/futures arb entry points of the four 1Q dividend stocks on KOSPI 200.

Sanghyun Park

Top 14 Korean Companies That May List in the US Stock Exchanges - Close The "Korea Discount Gap"

In this insight, we discuss 14 major Korean companies that may try to list their shares in the US exchanges in the next several years in order to...

Douglas Kim

Long-Term Bullish Inflections For Hang Seng, DAX, MSCI EM, & Bloomberg Commodity Index

The number of major country indexes showing major bullish inflections continues to grow. Broad commodities also breaking a 12.5-year downtrend....

Vermilion Research

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