In today’s briefing:
- Korea Short Sell Ban: Background, Manipulation, Holdings, Flows, Short Interest, Implications
- Full Transcript of Korea FSC Briefing on Sudden Short-Selling Ban, Including Key Trading Insights
- Lee Family to Sell 2.6 Trillion Won in Samsung Companies to Pay for Inheritance Taxes
- Descente (8114) : Itochu Still Buying and ANTA Gives You Earnings Hints
- Samsung Founder Family’s Pre-Announced Block Deals: Contract Terms & Fresh Contextual Conditions
- Amman Mineral (AMMN IJ): Potential Passive Inflows Coming Up Soon
- Tencent (700 HK): Board Meets Next Week; In-Specie Dividend Candidates
- Block Deal Sale of HYBE by Netmarble
- WuXi XDC IPO: Valuation First-Look
- Will Semiconductor GDR Listing – Well Flagged and Short Interest Has Been on the Rise
Korea Short Sell Ban: Background, Manipulation, Holdings, Flows, Short Interest, Implications
- Korea banned all short selling in March 2020 and resumed short selling only on KOSPI 200 and KOSDAQ 150 index constituents in May 2021.
- News reports indicate that there could be another short sell ban as soon as the coming week. Indications are that the ban could last 6 months.
- There are many implications of a total short sell ban including futures backwardation, market manipulation, and no emerging to developed market promotion.
Full Transcript of Korea FSC Briefing on Sudden Short-Selling Ban, Including Key Trading Insights
- There seems to be no immediate requirement to close existing contracts. However, even the chairman of the Financial Services Commission was unable to offer a definitive answer.
- The comprehensive investigation and prohibition of the customary naked short selling could lead to a rapid decline in overall market liquidity.
- The first is the short-term view, focusing on futures backwardation, and the second is the medium to long-term perspective, examining how the overall market liquidity decline will affect market flows.
Lee Family to Sell 2.6 Trillion Won in Samsung Companies to Pay for Inheritance Taxes
- Lee family plans to sell additional 2.6 trillion won worth of Samsung Group companies as part of their fourth installment of inheritance taxes.
- This inheritance tax share sale is likely to have a negative impact on Samsung Electronics, Samsung C&T, Samsung SDS, and Samsung Life Insurance.
- This may be just a coincidence but the regulators announced today a temporary ban on stock short selling which should help the Lee family to unload their shares.
Descente (8114) : Itochu Still Buying and ANTA Gives You Earnings Hints
- Descente Ltd (8114 JP) saw Itochu report it had continued its streak of consecutive days of buying, extending it to 115. Now they own 44.1% of voting rights.
- ANTA gave hints to the progress of Descente China in the Interim Results, and Q3 Operational Update. Descente analysts are 20% ahead of guidance, but they’re probably low still.
- Descente reports Q2 tomorrow. I expect the numbers and presentation to surprise at the Net Profit level. I expect a forecast revision.
Samsung Founder Family’s Pre-Announced Block Deals: Contract Terms & Fresh Contextual Conditions
- Considering year-end dividends, it appears likely that the trading timing might extend beyond this year. In the previous case, the trade execution timing was one month before the contract expired.
- Short selling is prohibited. However, all four companies offer single-stock futures, which provide instruments for proactive positioning. Nevertheless, aspects to consider are likely to increase regarding trading convenience and liquidity.
- The potential for inadequate liquidity might increase the discounts for these deals, potentially offering us fresh trading opportunities. We should proactively prepare trading setups that consider these contextual conditions.
Amman Mineral (AMMN IJ): Potential Passive Inflows Coming Up Soon
- Amman Mineral Internasional (AMMN IJ) listed on the Main Board of the IDX in July by raising US$715m in the largest Indonesia IPO for the year.
- The stock did not get Fast Entry to any of the local or global indices given the low float, but there could be multiple index inclusions in the near future.
- The stock is up 3x from its IPO price and there could be supply from some of the investors that got in at the offering price.
Tencent (700 HK): Board Meets Next Week; In-Specie Dividend Candidates
- Tencent (700 HK) announced in-specie dividends of JD.com (9618 HK) (US$15bn+) in 2021 and Meituan (3690 HK) (US$20bn) in 2022.
- With the Tencent (700 HK) Board meeting on 15 November to approve Q3 results and considering the payment of a dividend, the pattern could repeat this year.
- Tencent (700 HK) owns stakes of US$1bn+ in 10 listed companies. We take a look at the stocks that could be next in line to be paid as in-specie dividends.
Block Deal Sale of HYBE by Netmarble
- After the market close on 6 November, Netmarble announced that it will sell 2.5 million shares of HYBE which represents 569 billion won in amount at current price.
- The actual block deal amount is likely to be less than 569 billion won as there will likely be a block deal discount rate.
- We would avoid this deal, mainly because we think HYBE is overvalued relative to its peers.
WuXi XDC IPO: Valuation First-Look
- WuXi XDC Cayman (1877628D HK), a leading contract research, development and manufacturing organization (CRDMO), is pre-marketing an HKEx IPO to raise US$500 million, according to press reports.
- We previously discussed the IPO in WuXi XDC IPO: The Bull Case and WuXi XDC IPO: The Bear Case.
- In this note, we present our forecasts and take the first look at WuXi XDC’s potential valuation range.
Will Semiconductor GDR Listing – Well Flagged and Short Interest Has Been on the Rise
- Will Semiconductor Shan (603501 CH) is looking to raise US$450m in its Switzerland GDR listing. The bookrunners on the deal are UBS and JP Morgan.
- In its base deal, the firm is offering 31m GDRs (1 GDR to 1 ordinary A-share) for sale, at a 5.4-17.2% discount to last close on its A-share leg.
- The base deal would be a relatively small one for the firm to digest, representing just 3.8 days of three month ADV on its A-share leg.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Analytics and News
- ✓ Events & Webinars
