In today’s briefing:
- KOSPI 200 December Rebalancing: Key Points to Watch for in Proactive Position Build-Up
- Understanding Potential Issues Within SK Group from Hynix’s Kioxia CB Conversion
- LG Corp: Three Key Catalysts + NAV Valuation
- KT Corp (030200 KS): Foreign Room Drops Below Critical Level; Passive Selling to Come
- Latest Information on LG Electronics India Subsidiary’s IPO on the Indian Stock Market
KOSPI 200 December Rebalancing: Key Points to Watch for in Proactive Position Build-Up
- The momentum for getting ahead on positions with KOSPI 200 rebalancing is holding steady. With around 60% of the screening period behind us, it’s time to start preparing our positions.
- The current rebalancing’s screened changes have a relatively lower price volatility, suggesting a stronger chance for more aggressive position build-up now compared to previous rebalancings.
- Trading volumes vary greatly among these changes, affecting their passive impact sizes. Consider using different weights in basket trading instead of equal weights.
Understanding Potential Issues Within SK Group from Hynix’s Kioxia CB Conversion
- Hynix’s potential 15% stake in Kioxia doesn’t violate the 20% rule because KFTC’s mandatory stake rule doesn’t apply to foreign investments.
- SK Group may transfer Hynix’s 15% Kioxia stake to SK Square by splitting Hynix and merging its investment arm with SK Square for future AI investments.
- SK Square may attract more attention than Hynix short-term, as Kioxia’s stake via Hynix could boost market expectations for value transfer to SK Square.
LG Corp: Three Key Catalysts + NAV Valuation
- Three key catalysts for LG Corp include potential inclusion in Korea Value Up Index, an IPO of LG CNS in 1Q 2025, and an increasing probability of higher shareholder returns.
- An IPO of LG CNS is likely in 1Q 2025. LG CNS is currently valued at about 7 trillion won and LG Corp has a 50% stake.
- Our base case NAV valuation analysis of LG Corp suggests implied NAV of 15.3 trillion won or NAV per share of 96,957 won, which is 19.8% higher than current price.
KT Corp (030200 KS): Foreign Room Drops Below Critical Level; Passive Selling to Come
- Foreign investors have continued buying KT Corp (030200 KS) and the stock has outperformed SK Telecom (017670 KS), though not by a lot.
- Foreign buying has pushed foreign room in KT Corp (030200 KS) below 3.75% and the stock could be deleted from a global index at the next rebalance.
- There will be some interesting trading dynamics in KT Corp (030200 KS) over the next couple of months and there will be trading opportunities versus its peers.
Latest Information on LG Electronics India Subsidiary’s IPO on the Indian Stock Market
- LG Electronics has already picked the bankers for the Indian IPO. JP Morgan and Morgan Stanley are on board as the lead underwriters, along with two unnamed local Indian banks.
- LGEIL is aiming to submit the Draft Red Herring Prospectus (DRHP) to India’s SEBI by the fourth quarter of this year.
- LG Electronics plans to raise about USD 700 million by selling around 25% of its stake in a secondary offering.
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