Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Douglas Research Advisory

Equity Bottom-Up

<ul>
<li>In this insight, we highlight the recent pricing gap divergences of the major Korean holdcos and opcos which could provide trading opportunities in 4Q 2024.</li>
<li>Volatility has been high in the Korean stock market in the past several weeks resulting in some interesting widening of some gaps among numerous holdcos and opcos in Korea. </li>
<li>Of the 38 pair trades, 19 of them involved holdcos outperforming opcos in the past six months and the other 19 opcos outperforming holdcos in the same period. </li>
</ul>


In this insight, we highlight the recent pricing gap divergences of the major Korean holdcos and opcos which could provide trading opportunities in 4Q 2024.
Volatility has been high in the Korean stock market in the past several weeks resulting in some interesting widening of some gaps among numerous holdcos and opcos in Korea. 
Of the 38 pair trades, 19 of them involved holdcos outperforming opcos in the past six months and the other 19 opcos outperforming holdcos in the same period. 


Korean Holdcos Vs Opcos Gap Trading Opportunities in 4Q 2024

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>Construction and semiconductors are key targets due to their low value-up representation. For shareholder returns, keep an eye on Samsung C&amp;T and SK Square.</li>
<li>Expect announcements before the mid-September value-up index, with early September releases mirroring LG Electronics' prior notices and detailed plans arriving by Q4.</li>
<li>Even with prior notices, details will leak. Samsung C&amp;T and SK Square are likely to prioritize short-term shareholder returns over long-term growth, potentially leading to a bigger price impact.</li>
</ul>


Construction and semiconductors are key targets due to their low value-up representation. For shareholder returns, keep an eye on Samsung C&amp;T and SK Square.
Expect announcements before the mid-September value-up index, with early September releases mirroring LG Electronics' prior notices and detailed plans arriving by Q4.
Even with prior notices, details will leak. Samsung C&amp;T and SK Square are likely to prioritize short-term shareholder returns over long-term growth, potentially leading to a bigger price impact.


Keep an Eye on Samsung C&T & SK Square as the Next Hot Picks for Value-Up Announcements

Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

Cross Asset Strategy

<ul>
<li>South Korean Financials are experiencing a significant increase in fund ownership. Average fund weights are approaching record highs at 1.94%, with a record 52% positioned overweight.</li>
<li>At the fund level, a strong buy-side bias is evident, with 37 funds opening positions compared to just 3 closures over the last 6-months.</li>
<li>Strong ownership momentum in KB Financial, DB Insurance, Shinhan Financial, and SK Square have contributed to the sector-wide bullishness.</li>
</ul>


South Korean Financials are experiencing a significant increase in fund ownership. Average fund weights are approaching record highs at 1.94%, with a record 52% positioned overweight.
At the fund level, a strong buy-side bias is evident, with 37 funds opening positions compared to just 3 closures over the last 6-months.
Strong ownership momentum in KB Financial, DB Insurance, Shinhan Financial, and SK Square have contributed to the sector-wide bullishness.


South Korean Financials:  Conviction Move Higher in Positioning

<ul>
<li>KRX announced that both Hanwha Aerospace and the new Hanwha Industrial Solutions will be added to the KOSPI 200.</li>
<li>Since 2020, two K200 spinoffs had both companies remain: DL Holdings and DL E&amp;C in January 2021, and SK Telecom and SK Square in November 2021, with notable value increases.</li>
<li>This trade isn't risk-free and requires a sophisticated hedge setup, but the trading opportunities from this flow situation are worth close attention.</li>
</ul>


KRX announced that both Hanwha Aerospace and the new Hanwha Industrial Solutions will be added to the KOSPI 200.
Since 2020, two K200 spinoffs had both companies remain: DL Holdings and DL E&amp;C in January 2021, and SK Telecom and SK Square in November 2021, with notable value increases.
This trade isn't risk-free and requires a sophisticated hedge setup, but the trading opportunities from this flow situation are worth close attention.


Both Hanwha Aerospace Spinoffs Remain in KOSPI 200: Trading Value Gap Between Trading Suspension

<ul>
<li>One of the biggest stories in the Korean e-commerce sector this week has been TMON and WeMakePrice filing for court receivership due to liquidity crisis. </li>
<li>Singapore's Qoo10 is the controlling shareholder of TMON and WeMakePrice. Young-Bae Ku is the largest shareholder of Qoo10 with a 42.77% stake, followed by KKR with a 25.65% stake. </li>
<li>Competitors such as E-Mart and Coupang are most to benefit. PG companies such as KG Inicis and NHP KCP are negatively impacted. </li>
</ul>


One of the biggest stories in the Korean e-commerce sector this week has been TMON and WeMakePrice filing for court receivership due to liquidity crisis. 
Singapore's Qoo10 is the controlling shareholder of TMON and WeMakePrice. Young-Bae Ku is the largest shareholder of Qoo10 with a 42.77% stake, followed by KKR with a 25.65% stake. 
Competitors such as E-Mart and Coupang are most to benefit. PG companies such as KG Inicis and NHP KCP are negatively impacted. 


TMON and WeMakePrice File for Court Receivership - Impact on the Korean E-Commerce and PG Sectors

South Korea

SK Square Co., Ltd. operates as an investment company. The Company invests in semiconductors, information and communications technologies, and other industries. SK Square conducts businesses in South Korea.

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SK Square (402340 KS)

Korean Holdcos Vs Opcos Gap Trading Opportunities in 4Q 2024

In this insight, we highlight the recent pricing gap divergences of the major Korean holdcos and opcos which could provide trading opportunities in...

Douglas Kim

Keep an Eye on Samsung C&T & SK Square as the Next Hot Picks for Value-Up Announcements

This post dives into the potential for Samsung C&T and SK Square to be the next big players in value-up announcements and explores the likely price...

Sanghyun Park

South Korean Financials: Conviction Move Higher in Positioning

South Korean Financials are experiencing a significant increase in fund ownership. Average fund weights are approaching record highs at 1.94%,...

Steven Holden

Both Hanwha Aerospace Spinoffs Remain in KOSPI 200: Trading Value Gap Between Trading Suspension

This post explores trading opportunities targeting the value gap for Hanwha Aerospace spinoffs before and after the trading suspension, driven...

Sanghyun Park

TMON and WeMakePrice File for Court Receivership - Impact on the Korean E-Commerce and PG Sectors

TMON and WeMakePrice filing for court receivership is likely to benefit competitors such as E-Mart and Coupang. Payment Gateway (PG) companies such...

Douglas Kim

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