In today’s briefing:
- Korea FSS Releases Final Guidelines for Short Selling Compliance: Trading Implications
- Trading Considerations for Won Appreciation & Korean ADR Premium Volatility
- I-Scream Media IPO Book Building Results Analysis
- FnGuide Semiconductor Top10 Index Rebalance Preview: Two Changes Likely in October
- Hyosung Siblings’ Cross-Transfers Are Done: The 10%+ Hyosung Corp Stake Block Deal Remains
- EQD | KOSPI 200 Rising With Room to Go Higher (This Week Only)
- Lumir IPO Valuation Analysis
Korea FSS Releases Final Guidelines for Short Selling Compliance: Trading Implications
- This final guideline formalizes earlier drafts by the FSS. Though not strictly mandatory, its detailed requirements mean it functions as a de facto rule that must be followed closely.
- The new, stringent requirements are likely to eliminate common stock borrowing practices in Korea, making timely transactions difficult.
- New trading patterns and market flows may emerge when short selling resumes in April, with increased importance of borrow balance data and potential rise in counter-flow trading.
Trading Considerations for Won Appreciation & Korean ADR Premium Volatility
- Increased exchange rate volatility affects the ADR premium, but past patterns show that exchange rate and ADR premium directions may not always align, requiring consideration of specific contextual factors.
- If the won appreciates below the 1,300s range, overseas institutions may shift to asymmetric selling of underlying shares for foreign exchange profit, as shown by rising ADR premiums.
- We should watch for peak conditions to capture significant ADR premiums. Trading options include borrowing underlying shares for ADR conversion, even under the current short-selling ban.
I-Scream Media IPO Book Building Results Analysis
- I-Scream Media reported its IPO book building results. The IPO price has been determined at 32,000 won, which is at the low end of the IPO price range.
- A total of 561 institutional investors participated in the IPO survey. The final demand ratio was 31.3 to 1.
- Our valuation analysis suggests an implied price per share of 41,450 won, which represent a 29.5% upside from the IPO price.
FnGuide Semiconductor Top10 Index Rebalance Preview: Two Changes Likely in October
- With the start of the review period around the corner, there could be two changes for the FnGuide Semiconductor Top10 Index at the October rebalance.
- Wonik Ips (240810 KS) and Techwing Inc (089030 KS) are potential adds while ISC Co Ltd (095340 KS) and Dongjin Semichem (005290 KS) are potential deletes.
- Passives will need to trade more than 2x ADV on two potential changes and more than 1x ADV on another potential change.
Hyosung Siblings’ Cross-Transfers Are Done: The 10%+ Hyosung Corp Stake Block Deal Remains
- The Hyosung siblings swapped ₩60B in shares over August 13-14, raising the elder brother’s Hyosung Corp stake to 40.9% and lowering HS Hyosung below 3%.
- The younger brother must sell additionally at least 11.2% of his 14.2% Hyosung Corp stake. The elder brother may buy, but his cash position and 40% stake limit his need.
- This block deal will be the first to apply the new pre-disclosure rule. So, we should use it to test how the rule affects price movements for better entry timing.
EQD | KOSPI 200 Rising With Room to Go Higher (This Week Only)
- After a large sell-off, similar to other major global markets, the KOSPI 200 INDEX last week rebounded and closed strongly up. In this insight we want to evaluate what’s next.
- According to our pattern models, at the moment the index is not overbought yet, so in theory the index could rise higher, this week.
- Pay attention when the index reaches the 385 price area, from there the index could start to encounter some resistance.
Lumir IPO Valuation Analysis
- Base case valuation of Lumir is target price of 18,542 won per share. Given the low upside relative to IPO price range, we have a Negative view of this IPO.
- Our net profit estimates in 2025 and 2026 are 38% and 63.3% lower than the company’s estimates.
- Lumir provides key technologies for satellite systems, including small synthetic aperture radar (SAR) satellite systems and payloads.
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