In today’s briefing:
- Korea – Positioning in Stocks That Could Have Global Passive Flows
- Prime Target for Flow Trading Due to Low Pre-Exposure in December KOSPI 200 Rebalancing
- Seoul Guarantee Insurance IPO Industry Analysis
- EcoPro Materials IPO: The Bull Case
Korea – Positioning in Stocks That Could Have Global Passive Flows
- Posco DX (022100), Kum Yang (001570), SK Telecom (017670), Lotte Energy Materials (020150), Kakao Games (293490), Pan Ocean (028670), BGF retail (282330), Netmarble (251270) have been on investors/traders radars recently.
- There could be liquidity events in some of the stocks next month as passive index trackers look to buy/sell the stocks.
- Foreign investors have sold Lotte Energy Materials (020150 KS), Kakao Games (293490 KS), Pan Ocean (028670 KS) and Netmarble (251270 KS) while buying BGF retail (282330 KS).
Prime Target for Flow Trading Due to Low Pre-Exposure in December KOSPI 200 Rebalancing
- Posco DX’s KOSPI 200 fast entry effective date will likely coincide with the December regular rebalancing date.
- We should focus on the ad-hoc change deletion as we can expect more pronounced price impact near the effective date due to lower chances of premature exposure than regular reviews.
- The following three candidates are screened: K Car, Daesang Corporation, and Shinsegae International. They are all likely to exhibit a significant passive impact (x ADTV).
Seoul Guarantee Insurance IPO Industry Analysis
- In this insight, we provide additional industry analysis of Seoul Guarantee Insurance Corp which is getting ready to complete its IPO in Korea in the next several weeks.
- The IPO of Seoul Guarantee Insurance is an important signal that the Korean government may allow greater competition in the local surety insurance market in 2-3 years.
- SGIC has promised high dividends. If we assume the IPO price at the low end of the IPO price range (39,500 won), this would suggest a dividend yield of 8%.
EcoPro Materials IPO: The Bull Case
- EcoPro Materials (ECO123 KS) is a leading player in the electrode material industry. It is seeking to raise up to US$500 million in a KRX IPO.
- EcoPro Materials is offering 14.5 million shares at an IPO price range of KRW36,200-46,000 per share. Book building runs from 30 October to 3 November, with pricing on 7 November.
- The bull case rests on attractive addressable markets, aggressive production capacity expansion, ambition to be the leading non-Chinese player, strong revenue growth and improving cash conversion cycle.
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