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

SK Holdings Co., Ltd. is a holdings company that is engaged in various industries including energy, chemicals, information technology, semiconductors, marketing, and services businesses in South Korea and internationally.

<ul>
<li>Local traders are betting SK Inc will preemptively announce a treasury share cancellation before the June election, positioning it as the center of the regime change momentum play.</li>
<li>From a trading perspective, SK Inc could rally as a "buyback stock" and offer NAV gap trading opportunities.</li>
<li>Another option could be an event-driven hedge strategy: go long on SK and short index futures post-election. If Lee Jae-myung wins, SK could outperform, but the broader market may drop.</li>
</ul>


Local traders are betting SK Inc will preemptively announce a treasury share cancellation before the June election, positioning it as the center of the regime change momentum play.
From a trading perspective, SK Inc could rally as a "buyback stock" and offer NAV gap trading opportunities.
Another option could be an event-driven hedge strategy: go long on SK and short index futures post-election. If Lee Jae-myung wins, SK could outperform, but the broader market may drop.


Next Target After Hanwha for Regime Change Momentum Play: SK Inc's Share Cancellation

HLB Life Science Co., Ltd. wholesales and distributes pharmaceutical drugs. The Company through its subsidiaries provides targeted therapy, cell therapy, new drug development, medical devices production, and other related services. HLB Life Science also offers solar, geothermal, and other renewable energy engineering services.

<ul>
<li>We go long on HLB LS, short on HLB Inc, and close the short once HLB LS converts. If the deal falls through, there’s potential for extra profits.</li>
<li>The view that the merger’s worse for HLB LS is gaining support, making it likely the spread could go negative, though there’s risk, the chances are pretty high.</li>
<li>The 4% spread is the floor for arb profit, and cancellation risk could add extra gains. This angle deserves serious consideration right now.</li>
</ul>


We go long on HLB LS, short on HLB Inc, and close the short once HLB LS converts. If the deal falls through, there’s potential for extra profits.
The view that the merger’s worse for HLB LS is gaining support, making it likely the spread could go negative, though there’s risk, the chances are pretty high.
The 4% spread is the floor for arb profit, and cancellation risk could add extra gains. This angle deserves serious consideration right now.


HLB Merger Arb Setup: How Cancellation Risk Could Lead to Extra Profits

Samsung C&T Corporation conducts diversified business support services and resort operation activities. The Company offers a range of services in areas including clothing retail, construction, energy, real estate, food service, and resort accommodations. Samsung C&T also operates a resort with amusement rides, a zoo, water park, golf clubs, and restaurants.

<ul>
<li>The bill submitted by the Democratic Party today highlights that separate taxation on dividend income applies only to dividends from companies with a 35% payout ratio or higher.</li>
<li>We might see re-rating on dividend stocks with solid cash flow but below 35%, especially banks over telcos. Holdcos like Samsung C&amp;T, LG, and Hyundai Glovis could attract attention too.</li>
<li>Dark horses like NAVER, with earnings potential, and Samsung Electronics, currently at 25%, could attract attention if they increase payouts to 35%.</li>
</ul>


The bill submitted by the Democratic Party today highlights that separate taxation on dividend income applies only to dividends from companies with a 35% payout ratio or higher.
We might see re-rating on dividend stocks with solid cash flow but below 35%, especially banks over telcos. Holdcos like Samsung C&amp;T, LG, and Hyundai Glovis could attract attention too.
Dark horses like NAVER, with earnings potential, and Samsung Electronics, currently at 25%, could attract attention if they increase payouts to 35%.


Korea Dems' Surprise Proposal: Separate Tax for Dividends Over 35% Payout

Equity Capital Markets

LG Energy Solution / Equity Capital Markets

LG Energy Solution produces and sells batteries. The Company manufactures and sells automobile batteries, small batteries, energy storage system batteries, and other products. LG Energy Solution markets its products worldwide.

<ul>
<li>With a $2B deal expected, LG Chem will likely issue before end June as the 2023 EB’s put date nears and redemption pressure builds amid strained financials.</li>
<li>Two years ago, hedge shorting spiked post-issuance and post-exchange start, but price impact was mild—only 3% and 6% drops—likely due to strong sector sentiment then.</li>
<li>Sector sentiment’s turned sharply, so more aggressive price action is likely post-EB announcement. Timing is tricky, but the setup’s worth watching closely.</li>
</ul>


With a $2B deal expected, LG Chem will likely issue before end June as the 2023 EB’s put date nears and redemption pressure builds amid strained financials.
Two years ago, hedge shorting spiked post-issuance and post-exchange start, but price impact was mild—only 3% and 6% drops—likely due to strong sector sentiment then.
Sector sentiment’s turned sharply, so more aggressive price action is likely post-EB announcement. Timing is tricky, but the setup’s worth watching closely.


Trading LG Chem’s Large-Scale EB Issuance Backed by LG Energy Shares

Hanwha Aerospace / Equity Capital Markets

Hanwha Aerospace Co., Ltd. operates as an aircraft parts manufacturing company. The Company produces and sells aircraft gas turbine engine products, aircraft compressors, low pressure turbines, and other products. Hanwha Aerospace markets its products worldwide.

<ul>
<li>FSS has quietly greenlit Hanwha Aero’s raise — current pushback is just optics, with defense being too strategic for regulators to risk sending the wrong signal.</li>
<li>Hanwha Aero’s second updated filing should check the FSS box, and Hanwha Energy swapping cash for equity gives regulators cover to bless the deal without catching heat.</li>
<li>Base case is the raise goes through — trade the window between the amended filing and effective date, and shorts can still join the deal if they cover in time.</li>
</ul>


FSS has quietly greenlit Hanwha Aero’s raise — current pushback is just optics, with defense being too strategic for regulators to risk sending the wrong signal.
Hanwha Aero’s second updated filing should check the FSS box, and Hanwha Energy swapping cash for equity gives regulators cover to bless the deal without catching heat.
Base case is the raise goes through — trade the window between the amended filing and effective date, and shorts can still join the deal if they cover in time.


Hanwha Aero: Base Case Is the Raise Goes Through

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