Daily Brief South Korea: Korea Stock Exchange Kospi Index, GS Engineering & Construction, Alteogen Inc and more

In today’s briefing:

Korea’s Short Selling Ban to Stay, Likely Until EquiLend-Korean Version Launch
Top 20 Korean Construction Companies: Off-Balance Sheet Contingent Liabilities To Drive Lower Prices
Alteogen (196170 KS): First Proprietary Product Approval in Korea To Improve Revenue Visibility

Korea’s Short Selling Ban to Stay, Likely Until EquiLend-Korean Version Launch

Local market information indicates potential collaboration between KRX, FSS, and KSD to create a Korean EquiLend, aiming to centralize the stock lending channel.
Unprecedented globally, President Yoon aims to centralize short selling. The challenge lies in mandating foreign investors to use Korea’s platform, necessitating a complex legal framework.
Despite the difficulty, local authorities are compelled to pursue this initiative, raising the likelihood of a Korean EquiLend. Developing strategic plans in response is imperative.

We argue that the top 20 listed construction companies in Korea are likely to underperform KOSPI in 2024 mainly due to the excessive risks in the housing/commercial real estate sectors.
We expect the share prices of these 20 domestic construction companies to fall by at least 15%-20%+ on average in the next 6-12 months.
On 2 January 2024, Financial Supervisory Service (FSS) announced that there will be new reporting requirements for PF loans of Korean construction companies starting 2023 annual reports.

Alteogen Inc (196170 KS)‘s first proprietary recombinant human hyaluronidase liquid product, Tergase (ALT-BB4) is currently under approval process in Korea and is expected to receive approval in early 2024.
Tergase is a stand-alone hyaluronidase product that can be used for the treatment of various medical conditions, such as pain relief, edema treatment, and hyaluronic acid filler removal.
Compared to commercially available animal-derived hyaluronidase products in the market, Tergase is a highly purified product of high-quality with very few impurities and an excellent side effect profile.

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