Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Douglas Research Advisory

Event-Driven

Korea Aerospace Industries / Event-Driven

<ul>
<li>In the past several months, Hanwha Group companies purchased additional shares in Korea Aerospace Industries (KAI) so their combined stake is now 15.89%. </li>
<li>Hanwha Aerospace owns 9.9% stake in KAI, followed by Hanwha Systems (4.98%), and Hanwha Aerospace USA (1.01%). </li>
<li>I provide four main scenarios of the potential next moves by the Hanwha Group companies regarding Korea Aerospace Industries. </li>
</ul>


In the past several months, Hanwha Group companies purchased additional shares in Korea Aerospace Industries (KAI) so their combined stake is now 15.89%. 
Hanwha Aerospace owns 9.9% stake in KAI, followed by Hanwha Systems (4.98%), and Hanwha Aerospace USA (1.01%). 
I provide four main scenarios of the potential next moves by the Hanwha Group companies regarding Korea Aerospace Industries. 


Hanwha Aerospace and Other Hanwha Affiliates Now Own 15.9% of KAI - Next Move?

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.

Korea Stock Exchange Kospi Index / Event-Driven

Korea Stock Exchange Kospi Index (KOSPI INDEX)

<ul>
<li>Martial law has been declared 11 times since 1945, but this is the first since Korea’s post-‘90 democratization.</li>
<li>The Martial Law Command's first proclamation blocks parliament, raising legal questions about its constitutionality and making any immediate attempt to end martial law uncertain.</li>
<li>Defense and telecom stocks could outperform short-term due to martial law, making them strong trading targets to watch.</li>
</ul>


Martial law has been declared 11 times since 1945, but this is the first since Korea’s post-‘90 democratization.
The Martial Law Command's first proclamation blocks parliament, raising legal questions about its constitutionality and making any immediate attempt to end martial law uncertain.
Defense and telecom stocks could outperform short-term due to martial law, making them strong trading targets to watch.


Breaking: Korea Drops Martial Law, Local Markets in Turmoil—What’s the Short-Term Trade Play Here?

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

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

<ul>
<li>It has been reported that Hanwha Group affiliates including Hanwha Aerospace, Hanwha Systems, and Aero USA purchased a combined amount of 4.99% stake in Korea Aerospace Industries.</li>
<li>We estimate about 60-70%+ probability that KAI could be privatized in the next 3-5 years.</li>
<li>If Hanwha Group acquires the controlling stake in KAI, this could be a major positive move for the Hanwha Group's efforts to accelerate the creation of Korea SpaceX. </li>
</ul>


It has been reported that Hanwha Group affiliates including Hanwha Aerospace, Hanwha Systems, and Aero USA purchased a combined amount of 4.99% stake in Korea Aerospace Industries.
We estimate about 60-70%+ probability that KAI could be privatized in the next 3-5 years.
If Hanwha Group acquires the controlling stake in KAI, this could be a major positive move for the Hanwha Group's efforts to accelerate the creation of Korea SpaceX. 


Hanwha Group's Purchase of 4.99% Stake in Korea Aerospace Industries (KAI): Step 1 of Privatization?

<ul>
<li>Hanwha Aerospace (012450 KS) announced that it acquired additional 100,000 shares (0.1%) of Korea Aerospace Industries (047810 KS), raising Hanwha Group's stake in KAI to 5.09% (from 4.99% previously). </li>
<li>Hanwha Aerospace plans to continue purchasing KAI shares by the end of this year, investing 500 billion won (representing about 2.85% of outstanding shares). </li>
<li>This is likely to have a greater beneficial impact on KAI because there will be more buying of its KAI by Hanwha Aerospace, boosting KAI's share price. </li>
</ul>


Hanwha Aerospace (012450 KS) announced that it acquired additional 100,000 shares (0.1%) of Korea Aerospace Industries (047810 KS), raising Hanwha Group's stake in KAI to 5.09% (from 4.99% previously). 
Hanwha Aerospace plans to continue purchasing KAI shares by the end of this year, investing 500 billion won (representing about 2.85% of outstanding shares). 
This is likely to have a greater beneficial impact on KAI because there will be more buying of its KAI by Hanwha Aerospace, boosting KAI's share price. 


Hanwha Aerospace: To Purchase 500 Billion Won Worth of More KAI Shares: Step 2 of Privatization?

South Korea

Korea Aerospace Industries Ltd. designs and produces aircraft parts including fixed wings for aircrafts and rotary wings for helicopters. The Company also engages in aircraft upgrade and modification business and satellite development business.

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Korea Aerospace Industries (047810 KS)

Hanwha Aerospace and Other Hanwha Affiliates Now Own 15.9% of KAI - Next Move?

In the past several months, Hanwha Group companies purchased additional shares in Korea Aerospace Industries (KAI) so their combined stake is now...

Douglas Kim

Breaking: Korea Drops Martial Law, Local Markets in Turmoil—What’s the Short-Term Trade Play Here?

Breaking news: Korea has declared martial law, causing local markets to be in turmoil—what’s the short-term trading strategy moving forward?

Sanghyun Park

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

Hanwha Group's Purchase of 4.99% Stake in Korea Aerospace Industries (KAI): Step 1 of Privatization?

On 16 June, it was reported that Hanwha Group companies raised stake in Korea Aerospace Industries (047810 KS) (KAI) to 9.04%, from 4.99%...

Douglas Kim

Hanwha Aerospace: To Purchase 500 Billion Won Worth of More KAI Shares: Step 2 of Privatization?

Hanwha Aerospace plans to continue purchasing KAI shares by the end of this year, investing 500 billion won (representing about 2.85% of...

Douglas Kim

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