Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

<ul>
<li>Following the short sell ban announced on the weekend, the <a href="https://www.smartkarma.com/entities/korea-stock-exchange-kospi-200" target="_blank" data-smartkarma-citation="entities:26021:1" rel="noopener">KOSPI 200</a> and <a href="https://www.smartkarma.com/entities/kosdaq-150-index" target="_blank" data-smartkarma-citation="entities:31077:1" rel="noopener">KOSDAQ 150</a> opened higher on Monday and rallied through the day.</li>
<li>A lot of the intraday gains on Monday have been given up over the next two trading days. Surprisingly, KRX data indicates that not a lot of shorts have covered.</li>
<li>Foreigners have been net cash buyers since Monday (could indicate covering of offshore borrow) while retail were big sellers on Monday.</li>
</ul>


Following the short sell ban announced on the weekend, the KOSPI 200 and KOSDAQ 150 opened higher on Monday and rallied through the day.
A lot of the intraday gains on Monday have been given up over the next two trading days. Surprisingly, KRX data indicates that not a lot of shorts have covered.
Foreigners have been net cash buyers since Monday (could indicate covering of offshore borrow) while retail were big sellers on Monday.


Korea Short Sell Ban: Not a Lot Covered on Monday; Shorts Holding On?

Korea Stock Exchange KOSPI 200 / Event-Driven

Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX EQUITY)

<ul>
<li>Korea banned all short selling in March 2020 and resumed short selling only on <a href="https://www.smartkarma.com/entities/korea-stock-exchange-kospi-200" target="_blank" data-smartkarma-citation="entities:26021:1" rel="noopener">KOSPI 200</a> and <a href="https://www.smartkarma.com/entities/kosdaq-150-index" target="_blank" data-smartkarma-citation="entities:31077:1" rel="noopener">KOSDAQ 150</a> index constituents in May 2021.</li>
<li>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.</li>
<li>There are many implications of a total short sell ban including futures backwardation, market manipulation, and no emerging to developed market promotion.</li>
</ul>


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.


Korea Short Sell Ban: Background, Manipulation, Holdings, Flows, Short Interest, Implications

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

<ul>
<li>It was reported in numerous local media in Korea that FSS is investigating Kakao Mobility for a potential accounting fraud. </li>
<li>There are suspicions that Kakao Mobility may have artificially inflated its sales from 2020 to 2023 to enhance the value of the company prior to its IPO listing. </li>
<li>Given that the regulators are unlikely to make a final decision on this matter until next year, this is likely to be negative on both Kakao Mobility and Kakao Corp. </li>
</ul>


It was reported in numerous local media in Korea that FSS is investigating Kakao Mobility for a potential accounting fraud. 
There are suspicions that Kakao Mobility may have artificially inflated its sales from 2020 to 2023 to enhance the value of the company prior to its IPO listing. 
Given that the regulators are unlikely to make a final decision on this matter until next year, this is likely to be negative on both Kakao Mobility and Kakao Corp. 


Concerns About A Major Accounting Fraud at Kakao Mobility

Douglas Research Advisory

<ul>
<li>Kakao Corp announced that it plans to sell about 1 trillion won worth of Dunamu shares, representing 6.55% stake. </li>
<li>Dunamu is in the process of merging with Naver Financial. Given that Kakao and Naver are arch competitors, Kakao has decided to reduce its stake in Dunamu. </li>
<li>Kakao Corp is trading at P/E of 30.2x in 2026 and 25.1x in 2027 which appear expensive, especially given the company's weak sales growth (single digits annually next three years).  </li>
</ul>


Kakao Corp announced that it plans to sell about 1 trillion won worth of Dunamu shares, representing 6.55% stake. 
Dunamu is in the process of merging with Naver Financial. Given that Kakao and Naver are arch competitors, Kakao has decided to reduce its stake in Dunamu. 
Kakao Corp is trading at P/E of 30.2x in 2026 and 25.1x in 2027 which appear expensive, especially given the company's weak sales growth (single digits annually next three years).  


Kakao Plans to Sell 1 Trillion Won Worth of Dunamu

External broker reports(aggregated public sources), Mirae Asset Securities

Mirae Asset Securities

External broker reports(aggregated public sources)

Mirae Asset Securities Co.,Ltd. provides comprehensive wealth management services. The Company offers fixed income securities brokerage, securities dealing, equity underwriting, and other services. Mirae Asset Securities also deals with mergers and acquisitions, foreign currency, and financial derivatives

Equity Bottom-Up

<ul><li>For 3Q25, Kakao posted revenue of W2.09tr (+9% YoY) and operating profit of W208bn (+59% YoY), beating the consensus estimates (W2.02tr and W164bn) by 3% and 27%, respectively.</li><li>Platform revenue came in at W1.06tr (+12% YoY; 3% higher than our estimate), driven by strong performances from Kakao Mobility and Kakaopay.</li><li>Talk Biz ad growth accelerated, with revenue expanding 11% YoY to W325bn. Content revenue reached W1.03tr (+5% YoY; 5% higher than our estimate), supported by strength in the media segment. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

For 3Q25, Kakao posted revenue of W2.09tr (+9% YoY) and operating profit of W208bn (+59% YoY), beating the consensus estimates (W2.02tr and W164bn) by 3% and 27%, respectively.Platform revenue came in at W1.06tr (+12% YoY; 3% higher than our estimate), driven by strong performances from Kakao Mobility and Kakaopay.Talk Biz ad growth accelerated, with revenue expanding 11% YoY to W325bn. Content revenue reached W1.03tr (+5% YoY; 5% higher than our estimate), supported by strength in the media segment. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Kakao (035720 KS/Buy)Strong Confidence in Traffic Growth

South Korea

Kakao Corp. provides Internet portal services such as news, free e-mail, and leisure information.  The Company also offers cross-platform mobile messaging application that allows users to exchange messages.

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Kakao Corp (035720 KS)

Korea Short Sell Ban: Not a Lot Covered on Monday; Shorts Holding On?

Not a lot of shorts were covered on Monday. There could be more covering in the near term as the market drifts lower. KOSPI200 underperformed...

Brian Freitas

Korea Short Sell Ban: Background, Manipulation, Holdings, Flows, Short Interest, Implications

Media reports indicate that there could be a temporary short sell ban in Korea. This could lead to futures backwardation, market manipulation and a...

Brian Freitas

Concerns About A Major Accounting Fraud at Kakao Mobility

FSS is investigating Kakao Mobility for a potential, major accounting fraud. There are suspicions that Kakao Mobility may have artificially...

Douglas Kim

Kakao Plans to Sell 1 Trillion Won Worth of Dunamu

Kakao Corp plans to sell 1 trillion won worth of Dunamu shares, reducing stake due to merger of Dunamu and Naver Financial. Kakao plans to use the...

Douglas Kim

Kakao (035720 KS/Buy)Strong Confidence in Traffic Growth

For 3Q25, Kakao posted revenue of W2.09tr (+9% YoY) and operating profit of W208bn (+59% YoY), beating the consensus estimates (W2.02tr and W164bn)...

Mirae Asset Securities

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52-week Range

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Korea Short Sell Ban: Not a Lot Covered on Monday; Shorts Holding On?

Not a lot of shorts were covered on Monday. There could be more covering in the near term as the market drifts lower. KOSPI200 underperformed...

Brian Freitas

Korea Short Sell Ban: Background, Manipulation, Holdings, Flows, Short Interest, Implications

Media reports indicate that there could be a temporary short sell ban in Korea. This could lead to futures backwardation, market manipulation and a...

Brian Freitas

Concerns About A Major Accounting Fraud at Kakao Mobility

FSS is investigating Kakao Mobility for a potential, major accounting fraud. There are suspicions that Kakao Mobility may have artificially...

Douglas Kim

Kakao Plans to Sell 1 Trillion Won Worth of Dunamu

​Kakao Corp plans to sell 1 trillion won worth of Dunamu shares, reducing stake due to merger of Dunamu and Naver Financial. Kakao plans to use the...

Douglas Kim

Kakao (035720 KS/Buy)Strong Confidence in Traffic Growth

For 3Q25, Kakao posted revenue of W2.09tr (+9% YoY) and operating profit of W208bn (+59% YoY), beating the consensus estimates (W2.02tr and W164bn)...

Mirae Asset Securities

Kakao Corp plans to sell 1 trillion won worth of Dunamu shares, reducing stake due to merger of Dunamu and Naver Financial. Kakao plans to use the...