Korea / Special Sits, Pairs, Index Rebalancing, Clepsydra Capital

Sanghyun Park

I investigate special situations, pairs, and index rebalancing trades in Korea.

Korea / Special Sits, Pairs, Index Rebalancing

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Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/2834" target="_blank" data-smartkarma-citation="entities:2834:1">KMW Co Ltd (032500 KS)</a> subscription rights are now trading at ₩3,810. At the preliminary offer price of ₩19,200, spread stands at 2.78%.</li>
<li>Current price at a 20% discount will give a ₩18,920 offer price. This is a 4.05% '<em>potential</em>' spread assuming the current price remains unchanged until Dec 3 (final pricing date). 5% further down will give a 8.57% spread.</li>
<li>This doesn't seem really tempting. We see some arb trades by local arb traders, but not quite actively. Some local hedge funds are rather betting on 4Q turnaround. This 'force' may serve to support the price. Even 5% further down seems hard to pull off. I'd not trade on this.</li>
</ul>



KMW Co Ltd (032500 KS) subscription rights are now trading at ₩3,810. At the preliminary offer price of ₩19,200, spread stands at 2.78%.
Current price at a 20% discount will give a ₩18,920 offer price. This is a 4.05% 'potential' spread assuming the current price remains unchanged until Dec 3 (final pricing date). 5% further down will give a 8.57% spread.
This doesn't seem really tempting. We see some arb trades by local arb traders, but not quite actively. Some local hedge funds are rather betting on 4Q turnaround. This 'force' may serve to support the price. Even 5% further down seems hard to pull off. I'd not trade on this.


KMW Co Ltd

KMW Rights Offer: Arb Trading Status