Chief Executive Officer, Emmer Capital Partners Limited

Manishi Raychaudhuri

Chief Executive Officer

Emmer Capital Partners Limited

Emmer Capital Partners is an Asia Pacific focused financial advisory firm engaging in strategic financial asset allocation advice, bespoke thematic research and advising early-stage companies and connecting them to investors. Emmer Capital provides macro-economic and multi-asset investment strategy inputs to institutions, family offices, private wealth managers, private equity, and corporate boards directly and through independent research platforms. Emmer Capital also advises a wide range of startup companies on fund raising and business strategy. Emmer Capital's active engagement with the print and electronic media reaches a broad spectrum of investors across the globe.

Cross Asset Strategy

<ul>
<li>In a world of surging interest rates, highly leveraged markets, sectors and stocks are more vulnerable than unleveraged ones. The former set will have skyrocketing capital costs dampening their profitability.</li>
<li>China (86% net debt-equity in 2025), Thailand (105%) and Philippines (118%) are the most leveraged Asian markets. The least leveraged are Taiwan (54%), India (65%), Indonesia (66%) and Korea (68%).</li>
<li>Thai telecom, Philippines transportation, Philippines energy, Korean distribution services, Philippines telecom, Indonesian transportation are the most-leveraged market-sectors. Singapore health technology, Indonesian commercial services, Taiwan energy, Indonesian industrials are the least-leveraged.</li>
</ul>


In a world of surging interest rates, highly leveraged markets, sectors and stocks are more vulnerable than unleveraged ones. The former set will have skyrocketing capital costs dampening their profitability.
China (86% net debt-equity in 2025), Thailand (105%) and Philippines (118%) are the most leveraged Asian markets. The least leveraged are Taiwan (54%), India (65%), Indonesia (66%) and Korea (68%).
Thai telecom, Philippines transportation, Philippines energy, Korean distribution services, Philippines telecom, Indonesian transportation are the most-leveraged market-sectors. Singapore health technology, Indonesian commercial services, Taiwan energy, Indonesian industrials are the least-leveraged.


Derivatives and Quantitative Strategist

Gaudenz Schneider

Equity Derivatives

<ul>
<li>
<a href="https://www.smartkarma.com/entities/sk-hynix-inc" target="_blank" data-smartkarma-citation="entities:16955:1" rel="noopener">SK hynix (000660 KS)</a> fell 3.8% in August MTD, while its 2x Leveraged Index declined 13.4% and combined KRX-listed ETF AUM fell 28% to KRW 3.8tn.</li>
<li>The seven KRX-listed 2x long ETFs recorded combined net outflows of KRW 763bn, with units outstanding declining in six products and redemptions amplifying negative performance.</li>
<li>Daily flows in the long and inverse ETFs were negatively correlated, causing associated hedge flows to reinforce rather than offset each other, although the larger long products dominate the effect.</li>
</ul>



SK hynix (000660 KS) fell 3.8% in August MTD, while its 2x Leveraged Index declined 13.4% and combined KRX-listed ETF AUM fell 28% to KRW 3.8tn.
The seven KRX-listed 2x long ETFs recorded combined net outflows of KRW 763bn, with units outstanding declining in six products and redemptions amplifying negative performance.
Daily flows in the long and inverse ETFs were negatively correlated, causing associated hedge flows to reinforce rather than offset each other, although the larger long products dominate the effect.


SK Hynix (000660 KS): 2x Leveraged ETF Redemptions Compound 13% August Index Loss

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>
<a href="https://www.smartkarma.com/entities/sk-hynix-inc" target="_blank" data-smartkarma-citation="entities:16955:1" rel="noopener">SK Hynix (000660 KS)</a> raised US$26.5bn selling 177.9m shares of <a href="https://www.smartkarma.com/entities/sk-hynix-inc-a4e8e2ec-1a75-4752-b58c-eaa0d074d145" target="_blank" data-smartkarma-citation="entities:50283:1" rel="noopener">SK Hynix (SKHY US)</a> at US$149/share. <a href="https://www.smartkarma.com/entities/sk-hynix-inc-a4e8e2ec-1a75-4752-b58c-eaa0d074d145" target="_blank" data-smartkarma-citation="entities:50283:1" rel="noopener">SK Hynix (SKHY US)</a> closed at a 15.5% premium to the local line.</li>
<li>There will be passive buying in the local shares and the ADR line over the next few months. The ADR line could trade at a premium in the near-term.</li>
<li>We expect the ADR to trade between a 30-35% premium in the very short-term and that could drift lower following the limited passive buying in the ADR.</li>
</ul>



SK Hynix (000660 KS) raised US$26.5bn selling 177.9m shares of SK Hynix (SKHY US) at US$149/share. SK Hynix (SKHY US) closed at a 15.5% premium to the local line.
There will be passive buying in the local shares and the ADR line over the next few months. The ADR line could trade at a premium in the near-term.
We expect the ADR to trade between a 30-35% premium in the very short-term and that could drift lower following the limited passive buying in the ADR.


SK Hynix (000660 KS; SKHY US): Updated Index Flows/Timing & Where Could the Premium Settle?

Index Rebalance

<ul>
<li>There used to be a 30% single stock capping rule for the <a href="https://www.smartkarma.com/entities/korea-stock-exchange-kospi-200" target="_blank" data-smartkarma-citation="entities:26021:1" rel="noopener">Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX)</a>. Following a hue and cry, that was repealed in 2020.</li>
<li>With <a href="https://www.smartkarma.com/entities/samsung-electronics-co-ltd" target="_blank" data-smartkarma-citation="entities:191:1" rel="noopener">Samsung Electronics</a> and <a href="https://www.smartkarma.com/entities/sk-hynix-inc" target="_blank" data-smartkarma-citation="entities:16955:1" rel="noopener">SK Hynix</a> making up over 60% of the index weight, it may be time for the index provider and regulators to revisit capping, and at a lower level.</li>
<li>The <a href="https://www.smartkarma.com/entities/korea-stock-exchange-kospi-200" target="_blank" data-smartkarma-citation="entities:26021:1" rel="noopener">Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX)</a> shows concentration on every metric compared to other regional equity indices. That does not bode well in times of market volatility.</li>
</ul>


There used to be a 30% single stock capping rule for the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX). Following a hue and cry, that was repealed in 2020.
With Samsung Electronics and SK Hynix making up over 60% of the index weight, it may be time for the index provider and regulators to revisit capping, and at a lower level.
The Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) shows concentration on every metric compared to other regional equity indices. That does not bode well in times of market volatility.


KOSPI200 Index: Should Capping Be (Re)Introduced?

<ul>
<li>Asia-Ex-Japan equities have moved from a valuation rerating driven rally to an earnings driven rally. Since late October, Asia-ex-Japan equities have appreciated 8% but its forward PE has declined 6%.</li>
<li>Korea's 2026 EPS estimate up 67.8% in last 6 months, followed by Taiwan (17.5%) and Malaysia (7.5%). Philippines (-4.4%), India (-3.9%) and Indonesia (-1.3%) constitute the bottom of the pile.</li>
<li>Technology and basic materials are driving the earnings upgrades while consumer-oriented sectors are dragging them down. We think consumption sentiment recovery shall be essential for earnings upgrades to sustain.</li>
</ul>


Asia-Ex-Japan equities have moved from a valuation rerating driven rally to an earnings driven rally. Since late October, Asia-ex-Japan equities have appreciated 8% but its forward PE has declined 6%.
Korea's 2026 EPS estimate up 67.8% in last 6 months, followed by Taiwan (17.5%) and Malaysia (7.5%). Philippines (-4.4%), India (-3.9%) and Indonesia (-1.3%) constitute the bottom of the pile.
Technology and basic materials are driving the earnings upgrades while consumer-oriented sectors are dragging them down. We think consumption sentiment recovery shall be essential for earnings upgrades to sustain.


Asian Equities: The Earnings Boom - Korea Taiwan, Malaysia, Tech and Basic Materials Rule the Roost

South Korea

SK Hynix Inc. provides products and services for the electronic components industry. The Company manufactures semiconductors, such as dynamic random access memory (DRAM), NAND flash memory, and static random access memory (SRAM) chips.

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SK Hynix (000660 KS)

Asian Equities: Till Debt Do Us Part

When interest rates surge, highly leveraged markets, sectors & stocks are more vulnerable than unleveraged ones. Our granular analysis of Asian...

Manishi Raychaudhuri