Korea / Special Situations, Clepsydra Capital

Sanghyun Park

Korea / Special Situations

Korea / Special Sits, Pairs, Index Rebalancing

Clepsydra Capital

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

Event-Driven

<ul>
<li>
 Kakao managed to stay out of the relegation zone. Instead, Kia was pushed to the borderline. But POSCO failed to up its float rate, so Kia stayed in.</li>
<li>Besides that, LG Energy Solution and Celltrion made it to the index, replacing KB Financial and Shinhan Financial.</li>
<li>These passive flows appears to be of sufficient magnitude to cause a substantial price impact on T-1 Effectiveness. But it should also be approached with a fairly short window.</li>
</ul>



 Kakao managed to stay out of the relegation zone. Instead, Kia was pushed to the borderline. But POSCO failed to up its float rate, so Kia stayed in.
Besides that, LG Energy Solution and Celltrion made it to the index, replacing KB Financial and Shinhan Financial.
These passive flows appears to be of sufficient magnitude to cause a substantial price impact on T-1 Effectiveness. But it should also be approached with a fairly short window.


TIGER Top 10 Rebalancing: Four Names to Trade on T-1 Effective

<ul>
<li>There was a substantial increase in the AUM even in the current market condition. More funds must have sought blue chip stocks as relatively safe assets in this volatile market.</li>
<li>Celltrion and LG Energy Solution will likely replace KB Financial and Shinhan Financial. On the other hand, POSCO is out of the race even with a +5%p float rate change.</li>
<li>LG Energy also has an up-weight event of the KOSPI 200. Since these passive flow events have an interval of only one day, we expect a fairly concentrated passive impact.</li>
</ul>


There was a substantial increase in the AUM even in the current market condition. More funds must have sought blue chip stocks as relatively safe assets in this volatile market.
Celltrion and LG Energy Solution will likely replace KB Financial and Shinhan Financial. On the other hand, POSCO is out of the race even with a +5%p float rate change.
LG Energy also has an up-weight event of the KOSPI 200. Since these passive flow events have an interval of only one day, we expect a fairly concentrated passive impact.


TIGER (FnGuide) Top 10 ETF Rebalancing: Noteworthy Changes Emerging

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

<ul>
<li>KRX plans to launch KRX/S&amp;P ESG High Dividends Index on 4 October. This index will be composed of stocks in KOSPI 200 which have high dividend yields and ESG scores.</li>
<li>We provided a list of 20 stocks in KOSPI with high dividend yields with at least 500 billion won in market cap and those that have higher ESG scores.</li>
<li>Amid a major downturn in the global stock markets, there is a greater emphasis on the preservation of capital and increasing capital allocation to higher dividend yielding stocks.</li>
</ul>


KRX plans to launch KRX/S&amp;P ESG High Dividends Index on 4 October. This index will be composed of stocks in KOSPI 200 which have high dividend yields and ESG scores.
We provided a list of 20 stocks in KOSPI with high dividend yields with at least 500 billion won in market cap and those that have higher ESG scores.
Amid a major downturn in the global stock markets, there is a greater emphasis on the preservation of capital and increasing capital allocation to higher dividend yielding stocks.


Launch of KRX/S&P ESG High Dividends Index

<ul>
<li>Juice for cash &amp; carry arbitrage doesn't seem like much. Several names in contango, but the basis widening isn't at a sufficiently arb-tradable level.</li>
<li>Reverse cash &amp; carry isn't all that attractive either, but it certainly does offer more juice, even with borrow fees. Ssangyong C&amp;E, SKT, Shinhan, and KB deserve our attention.</li>
<li>A bit uncertain is whether the pattern of "LONG Spot until ex-dividend and Conversion to Short" through cash &amp; carry will repeat itself this time.</li>
</ul>


Juice for cash &amp; carry arbitrage doesn't seem like much. Several names in contango, but the basis widening isn't at a sufficiently arb-tradable level.
Reverse cash &amp; carry isn't all that attractive either, but it certainly does offer more juice, even with borrow fees. Ssangyong C&amp;E, SKT, Shinhan, and KB deserve our attention.
A bit uncertain is whether the pattern of "LONG Spot until ex-dividend and Conversion to Short" through cash &amp; carry will repeat itself this time.


3Q Dividend Estimates of Those with SSF for Cash & Carry Arb in Korea

Posco International Corporation / Event-Driven

<ul>
<li>On 12 August, Posco International stated that it plans to merge with one of POSCO Holdings' energy affiliate called POSCO Energy which is a major LNG provider in Korea.</li>
<li>We believe the merger between POSCO International and POSCO Energy is  value enhancing. The shareholders of POSCO International are getting a sweet deal in POSCO Energy at attractive valuations.</li>
<li>This M&amp;A deal is likely to boost the market cap of the combined companies and raise the rank of POSCO International in important indices such as KOSPI200. </li>
</ul>


On 12 August, Posco International stated that it plans to merge with one of POSCO Holdings' energy affiliate called POSCO Energy which is a major LNG provider in Korea.
We believe the merger between POSCO International and POSCO Energy is  value enhancing. The shareholders of POSCO International are getting a sweet deal in POSCO Energy at attractive valuations.
This M&amp;A deal is likely to boost the market cap of the combined companies and raise the rank of POSCO International in important indices such as KOSPI200. 


POSCO International + POSCO Energy = A Value Enhancing M&A Deal

South Korea

POSCO Holdings Inc. manufactures and distributes steel products. The Company produces crude steel, hot rolled steel, cold rolled steel, stainless steel, steel plates, wire rods, galvanized steel, electrical steel, and other related products. POSCO Holdings markets its products worldwide.

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POSCO Holdings (005490 KS)

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