Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Douglas Research Advisory

Event-Driven

<ul>
<li>Tencent has been interested in acquiring Nexon for more than six years. However, the timing and price were not right for such a deal to take place in the past.</li>
<li>The higher probability scenario is for Kim's family members to sell when the timing and price is right. This time around, a $15 billion could be the right price. </li>
<li>Late founder Kim's family members own a 44.4% stake in Nexon through NXC Corp and its affiliate NXMB BV. Kim's wife and daughters own a 67.6% stake in NXC Corp. </li>
</ul>


Tencent has been interested in acquiring Nexon for more than six years. However, the timing and price were not right for such a deal to take place in the past.
The higher probability scenario is for Kim's family members to sell when the timing and price is right. This time around, a $15 billion could be the right price. 
Late founder Kim's family members own a 44.4% stake in Nexon through NXC Corp and its affiliate NXMB BV. Kim's wife and daughters own a 67.6% stake in NXC Corp. 


Tencent To Acquire Nexon? Time and Price Lining Up for a Final Deal?

Index Rebalance

<ul>
<li>Korea Value Up index is up 8.2% from 30 September 2024 to 28 May 2025, outperforming KOSPI 200 (up 3.4%) and KOSDAQ 150 (down 7.9%) in the same period. </li>
<li>More capital is likely to flow into the Korea Value Up index going forward. The government's efforts to continue to push the Korea Value Up index is also positive.</li>
<li>The median market cap of the 27 new additions is 2,310 billion won versus 835 billion won for the 32 deletions. KRX is emphasizing on companies with higher market cap.</li>
</ul>


Korea Value Up index is up 8.2% from 30 September 2024 to 28 May 2025, outperforming KOSPI 200 (up 3.4%) and KOSDAQ 150 (down 7.9%) in the same period. 
More capital is likely to flow into the Korea Value Up index going forward. The government's efforts to continue to push the Korea Value Up index is also positive.
The median market cap of the 27 new additions is 2,310 billion won versus 835 billion won for the 32 deletions. KRX is emphasizing on companies with higher market cap.


Korea Value Up: Outperformance Relative to KOSPI200 & KOSDAQ150 Likely to Attract Greater Capital

<ul>
<li>On 29 April, Krafton announced that it plans to acquire a 39.37% controlling stake in Neptune Company from Kakao Games for 165 billion won ($114.9 million).</li>
<li>Prior to this deal, Krafton owned a 3.2% stake in Neptune. After this deal is completed, Krafton will own a 42.53% stake (19.86 million shares) of Neptune.</li>
<li>Krafton reported excellent results in 1Q 2025. The company beat its sales, operating profit, and net profit by 10.1%, 18.3%, and 13.8%, respectively in 1Q 2025. </li>
</ul>


On 29 April, Krafton announced that it plans to acquire a 39.37% controlling stake in Neptune Company from Kakao Games for 165 billion won ($114.9 million).
Prior to this deal, Krafton owned a 3.2% stake in Neptune. After this deal is completed, Krafton will own a 42.53% stake (19.86 million shares) of Neptune.
Krafton reported excellent results in 1Q 2025. The company beat its sales, operating profit, and net profit by 10.1%, 18.3%, and 13.8%, respectively in 1Q 2025. 


Krafton: Acquisition of Controlling Stake in Neptune from Kakao Games

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

<ul>
<li>Short notional ticked higher on the KOSPI and KOSDAQ markets and is expected to continue increasing over the next few months.</li>
<li>Since the resumption of short selling, foreign holdings of Korean equities have increased from 29.26% to 29.3%.</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> to <a href="https://www.smartkarma.com/entities/kosdaq-150-index" target="_blank" data-smartkarma-citation="entities:31077:1" rel="noopener">KOSDAQ 150 Index (KOSDQ150 INDEX)</a> ratio has stayed stable over the last 3 trading days.</li>
</ul>


Short notional ticked higher on the KOSPI and KOSDAQ markets and is expected to continue increasing over the next few months.
Since the resumption of short selling, foreign holdings of Korean equities have increased from 29.26% to 29.3%.
The Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) to KOSDAQ 150 Index (KOSDQ150 INDEX) ratio has stayed stable over the last 3 trading days.


Korea Short Selling: What Happened on Day 1?

Equity Bottom-Up

<ul>
<li>One of the big thematic events on the Korean stock market has been the expectation that China could lift ban on Korean popular culture (Hallyu) as early as May 2025. </li>
<li>China's President Xi recently stated <em>"Cultural exchanges are a valuable part of our bilateral relations [between China and Korea]. We should avoid any problems occurring in handling such matters.” </em>
</li>
<li>We provide a list of 40 stocks in Korea that could most benefit from the end of lifting ban of Korean popular culture. </li>
</ul>


One of the big thematic events on the Korean stock market has been the expectation that China could lift ban on Korean popular culture (Hallyu) as early as May 2025. 
China's President Xi recently stated "Cultural exchanges are a valuable part of our bilateral relations [between China and Korea]. We should avoid any problems occurring in handling such matters.” 

We provide a list of 40 stocks in Korea that could most benefit from the end of lifting ban of Korean popular culture. 


China Could Lift Ban on Korean Popular Culture (Hallyu) As Early As May 2025

South Korea

NCSOFT Corporation develops and markets on-line games that enable users to play over the Internet and computer software, such as web editing software.  The Company also designs and constructs databases, Intranet, and commercial Internet access systems.

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NCSOFT Corp (036570 KS)

Tencent To Acquire Nexon? Time and Price Lining Up for a Final Deal?

The higher probability scenario is for Kim's family members to sell when the timing and price is right. This time around, a sale of NXC Corp/Nexon...

Douglas Kim

Korea Value Up: Outperformance Relative to KOSPI200 & KOSDAQ150 Likely to Attract Greater Capital

Korea Value Up index is up 8.2% from 30 September 2024 to 28 May 2025, outperforming KOSPI 200 (up 3.4%) and KOSDAQ 150 (down 7.9%) in the same...

Douglas Kim

Krafton: Acquisition of Controlling Stake in Neptune from Kakao Games

On 29 April, Krafton announced that it plans to acquire a 39.37% controlling stake in Neptune Company from Kakao Games for 165 billion won ($114.9...

Douglas Kim

Korea Short Selling: What Happened on Day 1?

Short notional has increased as has foreign ownership of Korean equities. Stock selection will become increasingly important. The forecast index...

Brian Freitas

China Could Lift Ban on Korean Popular Culture (Hallyu) As Early As May 2025

One of the big thematic events that have impacted the Korean stock market this week has been the expectation that China could lift ban on Korean...

Douglas Kim

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