Consumer: LG Energy Solution, KT&G Corporation, Carabao Group, Trent Ltd and more

• We typically estimate the size of the FTSE All Cap tracking fund to be around $600B. However, empirically, one-third of this was witnessed in Korean stocks during the rebalancing week.
• Estimating each passive flow based on this, we should expect LG Energy to receive the most significant flow at 1.16x ADTV from this point until the closing of this Friday. 
• As for Kakao Pay, the FTSE announced an increase in the investability to 15.8% (due to Alipay’s block deals), offering a passive inflow of 0.36x ADTV.

• Among the local theme ETFs in Korea, the TIGER (FnGuide) Top 10 has the highest win rate on rebalancing flow trade.
• LG Energy deserves the most attention at the next rebalancing event. If LG Chem disposes of some of its LG Energy shares, LG Energy can bypass those on the borderline.
• In this case, Shinhan, the one on the borderline at this point, will face a passive flow of -0.65x ADTV, while LG Energy will receive +0.25x.

• In this insight, we discuss the major reasons why KT&G Corporation (033780 KS) is a prime candidate for corporate activism in Korea.
• KT&G shares are up 0.6% YTD, outperforming KOSPI which is down 16.3%. We believe KT&G shares are well poised to continue to outperform the market in the next 6-12 months. 
• Corporate activists may be looking to force KT&G to cancel treasury shares. Also, there can be a case made to separate the non-tobacco businesses (including ginseng) from KT&G. 

• The medium to long-term outlook looks promising,thanks to high demand for energy drinks across Asia-Pacific owing to trend of urbanization and rising disposable income. Meanwhile, 2H22 earnings are confirmed recovery 
• More room to expand in Asia-Pacific Mordor Intelligence projected the Asia-Pacific energy drinks market value, which is the CBG key market focus to increase 8.46%CAGR in 2022-2027
• China market (4% of total revenue in 2021) is one of the CBG’s key market given the largest size of energy drinks market in Asia-Pacific with plenty of opportunity 

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