In today’s briefing:
- KOSPI200 Index Rebalance: Two Sets of Changes
- KOSDAQ150 Index Rebalance: 8 Changes with Some Surprises; Performance Deteriorating
- How Should We Time the L&F Shorting Event for Another Share Dilution Risk?
- Trading Strategy Post KRX Rebalance Announcement of KOSPI 200 and KOSDAQ 150
- PhilEnergy IPO Preview
KOSPI200 Index Rebalance: Two Sets of Changes
- There will be 2 additions and 2 deletions for the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) at the June rebalance that will be implemented on 8 June.
- Kum Yang (001570 KS) and Cosmochemical (005420 KS), both high probability names, are inclusions while Hwaseung Enterprise (241590 KS) and Dongwon Industries (006040 KS) are deletions.
- Not surpisingly, there is almost no short interest on the adds. Short interest on the deletes is higher and rising. Expect short covering on the deletes prior to implementation.
KOSDAQ150 Index Rebalance: 8 Changes with Some Surprises; Performance Deteriorating
- There are 8 inclusions and 8 exclusions for the KOSDAQ 150 Index (KOSDQ150 INDEX) at the June rebalance to be implemented at the close on 8 June.
- There is one surprise on the deletions and there are a few surprise non-deletions. Smaller surprise on some non-inclusions.
- Short interest is non-existent on the adds and is a lot larger on the deletes. Shorts on the deletes will be covered in the next few weeks.
How Should We Time the L&F Shorting Event for Another Share Dilution Risk?
- The main challenge is the construction of new production facilities in the US. The investment amount is estimated to be around ₩1T, achieving an annual production capacity of 100,000 tons.
- The government’s approval is the most significant factor to monitor. It will likely be granted between late June or early July, which is when we should start building positions.
- Due to the local market’s expectation of L&F’s upcoming fundraising event, some traders may start building their positions early on. It’s important to consider this possibility and act preemptively.
Trading Strategy Post KRX Rebalance Announcement of KOSPI 200 and KOSDAQ 150
- Korea Exchange announced the KOSPI 200 and KOSDAQ 150 indices constituents changes today.
- Kum Yang (001570 KS) and Cosmochemical (005420 KS) were included in the KOSPI 200. Dongwon Industries (006040 KS) and Hwaseung Enterprise (241590 KS) were excluded in KOSPI 200 index.
- We expect continued underperformance of Kumyang and Cosmo Chemical as many investors will now start to sell these stocks based on “buy on rumor, sell on news” strategy.
PhilEnergy IPO Preview
- PhilEnergy is offering 2.8 million shares in the IPO and expected market cap range of the IPO is from 279 billion won to 318 billion won.
- The IPO price range is from 26,300 won to 30,000 won and the total offering amount is 74 billion to 84.4 billion won.
- The company’s core products include stacking and laser notching equipment used in the rechargeable batteries manufacturing process.
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