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

Sanghyun Park

Korea / Special Sits, Pairs, Index Rebalancing

Clepsydra Capital

Investigate special situations, pairs, and index rebalancing trades in Korea.

Event-Driven

Samsung Electronics Pref Shares / Event-Driven

Samsung Electronics Co., Ltd. manufactures a wide range of consumer and industrial electronic equipment and products such as semiconductors, personal computers, peripherals, monitors, televisions, and home appliances including air conditioners and microwave ovens. The Company also produces Internet access network systems and telecommunications equipment including mobile phones.

Samsung Electronics Pref Shares (005935 KS)

<ul>
<li>Chosun reports that some Samsung affiliates are exploring tax-free dividends at the operational level, with execs reportedly briefed on the idea.</li>
<li>Surprisingly, regulators and politicians haven't objected to tax-free dividends, which ironically align with the value-up policy. The delay in Samsung's value-up announcements may be due to this decision.</li>
<li>It’s unclear if Samsung Electronics and Life will drop tax-free dividends, but if regulators approve, they could introduce it suddenly in their value-up updates, especially with Lee Jae-yong’s cash crunch.</li>
</ul>


Chosun reports that some Samsung affiliates are exploring tax-free dividends at the operational level, with execs reportedly briefed on the idea.
Surprisingly, regulators and politicians haven't objected to tax-free dividends, which ironically align with the value-up policy. The delay in Samsung's value-up announcements may be due to this decision.
It’s unclear if Samsung Electronics and Life will drop tax-free dividends, but if regulators approve, they could introduce it suddenly in their value-up updates, especially with Lee Jae-yong’s cash crunch.


The Hot Chatter in the Local Market: Tax-Free Dividends – Is Samsung In?

Equity Capital Markets

Hanwha Corporation / Equity Capital Markets

Hanwha Corporation imports and exports petrochemicals, machinery, automotives, electronics, and steel.  The Company also produces explosives for the defense and construction industries.  In addition, Hanwha manufactures automotive airbag inflators and telecommunication equipment, such as wireless phones and provides financial services through its subsidiaries.

<ul>
<li>Hanwha Corp’s chances of raising 1T KRW without a capital call are slim, likely channeling Hanwha Energy’s 1.3T KRW into Hanwha Corp intead of Hanwha Aero.</li>
<li>A shareholder-allotted rights issue from Hanwha Corp looks likely, and with short-selling resumption, it sets up a clean arbitrage play with low risk before the official announcement.</li>
<li>Timing is key—Hanwha’s using debt for now, but likely won’t delay long. Expect Hanwha Corp’s rights issue to follow Hanwha Aero’s, probably between June and July.</li>
</ul>


Hanwha Corp’s chances of raising 1T KRW without a capital call are slim, likely channeling Hanwha Energy’s 1.3T KRW into Hanwha Corp intead of Hanwha Aero.
A shareholder-allotted rights issue from Hanwha Corp looks likely, and with short-selling resumption, it sets up a clean arbitrage play with low risk before the official announcement.
Timing is key—Hanwha’s using debt for now, but likely won’t delay long. Expect Hanwha Corp’s rights issue to follow Hanwha Aero’s, probably between June and July.


The Hidden Play in Hanwha’s Noisy Stake Reshuffling: Hanwha Corp’s Rights Issue

LS Electric Co., Ltd. manufactures and distributes electrical power equipment. The Company produces smart power equipment, smart automation equipment, smart railway equipment, and other related products. LS Electric also develops smart grid, micro grid, energy storage systems, and metal products.

<ul>
<li>Local traders size up borrowing balances by comparing them to free-float shares, using KRX data for consistency. While not always exact, it’s the go-to reference for most traders.</li>
<li>They usually watch for borrowing balances crossing 3% of float, triggering price action. With short selling back, many are now bumping that threshold to 4%.</li>
<li>Borrowing balance structures differ between large and small/mid-caps. Traders use a 1 trillion KRW market cap threshold to split them, aligning with TMI indices for long/short setups.</li>
</ul>


Local traders size up borrowing balances by comparing them to free-float shares, using KRX data for consistency. While not always exact, it’s the go-to reference for most traders.
They usually watch for borrowing balances crossing 3% of float, triggering price action. With short selling back, many are now bumping that threshold to 4%.
Borrowing balance structures differ between large and small/mid-caps. Traders use a 1 trillion KRW market cap threshold to split them, aligning with TMI indices for long/short setups.


How to Clean Up Korea’s Borrowing Balance Stats

Samsung SDI Co., Ltd. specializes in developing Lithium Ion Battery (LIB) technology.  The Company also manufactures cathode ray tubes (CRTs) for televisions and computer monitors.  Samsung SDI also produces liquid crystal display (LCD) components and rechargeable batteries for cellular phones , personal digital assistants (PDAs), Energy Storage Systems and solar panels.

<ul>
<li>Korea’s rights issues offer a clean arb setup—track stock rights vs. spot price, with first price as a cap, and lock in predictable entry vs. exit costs.</li>
<li>Aggressive locals skip hedging, betting the discount holds between final pricing and listing. History backs it, but it’s a case-by-case call—not a blanket recommendation.</li>
<li>Samsung SDI and Hanwha Aerospace’s KRW 5.5T raise is massive, likely flooding stock rights into the market—prime setup for arb plays.</li>
</ul>


Korea’s rights issues offer a clean arb setup—track stock rights vs. spot price, with first price as a cap, and lock in predictable entry vs. exit costs.
Aggressive locals skip hedging, betting the discount holds between final pricing and listing. History backs it, but it’s a case-by-case call—not a blanket recommendation.
Samsung SDI and Hanwha Aerospace’s KRW 5.5T raise is massive, likely flooding stock rights into the market—prime setup for arb plays.


Revisiting Korea’s Local Rights Issue Arb Setup

Index Rebalance

VIOL Co., Ltd. manufactures and distributes medical equipment. The Company produces sylfirms, scarlets, skinstamps, and other related products. VIOL markets its products worldwide.

<ul>
<li>HLB Life Science faces delisting if it stays in ATTENTION for four years or gets a disclaimer in an audit—barring surprises, there's still runway before it’s a real threat.</li>
<li>HLB Inc getting ATTENTION in May looks likely, as KRX factors in frequent correction disclosures—HLB’s history with Rivoceranib filings and the failed FDA bid add to the risk.</li>
<li>If HLB Inc. gets ATTENTION in May and drops from KOSDAQ 150, VIOL (335890 KS) steps in—worth positioning ahead of late April.</li>
</ul>


HLB Life Science faces delisting if it stays in ATTENTION for four years or gets a disclaimer in an audit—barring surprises, there's still runway before it’s a real threat.
HLB Inc getting ATTENTION in May looks likely, as KRX factors in frequent correction disclosures—HLB’s history with Rivoceranib filings and the failed FDA bid add to the risk.
If HLB Inc. gets ATTENTION in May and drops from KOSDAQ 150, VIOL (335890 KS) steps in—worth positioning ahead of late April.


Detailing KRX Market Alerts & Passive Flow Plays

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

Sanghyun Park
Korea / Special Sits, Pairs, Index Rebalancing
• Clepsydra Capital

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