Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Event-Driven

<ul>
<li>In this insight, we discuss the increasing probability of Kakao Corp (035720 KS) losing its controlling shareholding of KakaoBank (323410 KS).</li>
<li>The FSS Chairman Lee Bok-Hyun emphasized that the FSS may punish Kakao Corp for a potential stock manipulation of S.M.Entertainment amid the M&amp;A tender offer process earlier this year.</li>
<li>At this point, the higher probability event appears to be a combination of fine and Kakao Corp selling at least 10% of its stake in Kakao Bank to another company.</li>
</ul>


In this insight, we discuss the increasing probability of Kakao Corp (035720 KS) losing its controlling shareholding of KakaoBank (323410 KS).
The FSS Chairman Lee Bok-Hyun emphasized that the FSS may punish Kakao Corp for a potential stock manipulation of S.M.Entertainment amid the M&amp;A tender offer process earlier this year.
At this point, the higher probability event appears to be a combination of fine and Kakao Corp selling at least 10% of its stake in Kakao Bank to another company.


Increasing Probability of Kakao Corp Losing Its Controlling Shareholding of Kakao Bank

<ul>
<li>On 25 October, Eoflow announced that the M&amp;A of Eoflow by Medtronic has been postponed. </li>
<li>The closing date for Eoflow's stock transfer agreement with Medtronic has now been changed to 3 January 2024. </li>
<li>Although we believe Medtronic will continue to pursue Eoflow, the M&amp;A tender offer price could be lowered to about 26,000 won, which would be nearly 20% higher than current price.</li>
</ul>


On 25 October, Eoflow announced that the M&amp;A of Eoflow by Medtronic has been postponed. 
The closing date for Eoflow's stock transfer agreement with Medtronic has now been changed to 3 January 2024. 
Although we believe Medtronic will continue to pursue Eoflow, the M&amp;A tender offer price could be lowered to about 26,000 won, which would be nearly 20% higher than current price.


Medtronic's M&A of Eoflow Timeline Postponed

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.

<ul>
<li>Financial regulators will likely mandate Kakao Corp to divest all but 10% of its stake in Kakao Bank. The deadline is six months from the date of the order.</li>
<li>If this issue is resolved through the forced sale of the stake, it is anticipated that this stake volume will eventually be released into the market through block deals.</li>
<li>Kakao may proactively divest its Kakao Bank stake to transfer the majority shareholder position to KIS, regardless of the judicial outcome.</li>
</ul>


Financial regulators will likely mandate Kakao Corp to divest all but 10% of its stake in Kakao Bank. The deadline is six months from the date of the order.
If this issue is resolved through the forced sale of the stake, it is anticipated that this stake volume will eventually be released into the market through block deals.
Kakao may proactively divest its Kakao Bank stake to transfer the majority shareholder position to KIS, regardless of the judicial outcome.


Understanding Kakao Bank's Overhang Risk from Legal Consequences for Kakao Corp

Quantitative Researcher, MRM Research

Nico Rosti

Quantitative Researcher

MRM Research

Quantitative Research

Equity Derivatives

Korea Stock Exchange KOSPI 200 / Equity Derivatives

<ul>
<li>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 INDEX</a> has reached a tipping point: the previous Bull run trend is cracking, there is a high chance the index will drop.</li>
<li>The current MRM WEEKLY pattern is bearish: if the index falls for more than 1 week it may tailspin into a 4-6 weeks correction in September.</li>
<li>Cover your LONG holdings, support can be found at 325 (Q2), 315 (Q3) and 297 (Inner Fence).</li>
</ul>


The KOSPI 200 INDEX has reached a tipping point: the previous Bull run trend is cracking, there is a high chance the index will drop.
The current MRM WEEKLY pattern is bearish: if the index falls for more than 1 week it may tailspin into a 4-6 weeks correction in September.
Cover your LONG holdings, support can be found at 325 (Q2), 315 (Q3) and 297 (Inner Fence).


EQD | KOSPI 200 Index's Decisive Week: New WEEKLY LONG Supports

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>
<a href="https://www.smartkarma.com/entities/ecopro-co-ltd" target="_blank" data-smartkarma-citation="entities:19029:1" rel="noopener">Ecopro (086520 KS)</a>, <a href="https://www.smartkarma.com/entities/jyp-entertainment-corp" target="_blank" data-smartkarma-citation="entities:17598:1" rel="noopener">Jyp Entertainment (035900 KS)</a>, <a href="https://www.smartkarma.com/entities/daewoo-shipbuilding-marine-engineering" target="_blank" data-smartkarma-citation="entities:12531:1" rel="noopener">Hanwha Ocean (042660 KS)</a>, <a href="https://www.smartkarma.com/entities/hanmi-semiconductor-co-ltd" target="_blank" data-smartkarma-citation="entities:15587:1" rel="noopener">Hanmi Semiconductor (042700 KS)</a>, <a href="https://www.smartkarma.com/entities/cj-corp" target="_blank" data-smartkarma-citation="entities:13964:1" rel="noopener">CJ Corp (001040 KS)</a> and <a href="https://www.smartkarma.com/entities/e-mart-inc" target="_blank" data-smartkarma-citation="entities:6993:1" rel="noopener">E Mart (139480 KS)</a> have been on investors/traders radars recently.</li>
<li>There will be liquidity demand on the stocks in a week and there is pre-positioning on a lot of the stocks.</li>
<li>Since 10 August, retail investors have net bought <a href="https://www.smartkarma.com/entities/jyp-entertainment-corp" target="_blank" data-smartkarma-citation="entities:17598:1" rel="noopener">Jyp Entertainment</a> and <a href="https://www.smartkarma.com/entities/e-mart-inc" target="_blank" data-smartkarma-citation="entities:6993:1" rel="noopener">E Mart</a>, foreigners have net bought <a href="https://www.smartkarma.com/entities/ecopro-co-ltd" target="_blank" data-smartkarma-citation="entities:19029:1" rel="noopener">Ecopro</a>, <a href="https://www.smartkarma.com/entities/daewoo-shipbuilding-marine-engineering" target="_blank" data-smartkarma-citation="entities:12531:1" rel="noopener">Hanwha Ocean</a> and <a href="https://www.smartkarma.com/entities/hanmi-semiconductor-co-ltd" target="_blank" data-smartkarma-citation="entities:15587:1" rel="noopener">Hanmi Semiconductor</a>, while local institutions have net bought <a href="https://www.smartkarma.com/entities/cj-corp" target="_blank" data-smartkarma-citation="entities:13964:1" rel="noopener">CJ Corp</a>.</li>
</ul>



Ecopro (086520 KS), Jyp Entertainment (035900 KS), Hanwha Ocean (042660 KS), Hanmi Semiconductor (042700 KS), CJ Corp (001040 KS) and E Mart (139480 KS) have been on investors/traders radars recently.
There will be liquidity demand on the stocks in a week and there is pre-positioning on a lot of the stocks.
Since 10 August, retail investors have net bought Jyp Entertainment and E Mart, foreigners have net bought Ecopro, Hanwha Ocean and Hanmi Semiconductor, while local institutions have net bought CJ Corp.


Korea - Positioning in Ecopro, JYP Entertainment, Hanwha Ocean, Hanmi Semi, CJ Corp, E-Mart

South Korea

HYBE Co., Ltd. operates as an entertainment company. The Company provides music production, album distribution, entertainers management, publicity, planning, training, and other services. HYBE also makes television shows.

Price Gauge
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HYBE (352820 KS)

Increasing Probability of Kakao Corp Losing Its Controlling Shareholding of Kakao Bank

In this insight, we discuss the increasing probability of Kakao Corp losing its controlling shareholding of Kakao Bank. Kakao Corp could be forced...

Douglas Kim

Medtronic's M&A of Eoflow Timeline Postponed

The M&A between Eoflow and Medtronic has been postponed, with a new closing date set for January 3, 2024. The tender offer price may be lowered to...

Douglas Kim

Understanding Kakao Bank's Overhang Risk from Legal Consequences for Kakao Corp

This post provides a precise understanding of the potential overhang risk for Kakao Bank resulting from legal consequences for Kakao Corp.

Sanghyun Park

EQD | KOSPI 200 Index's Decisive Week: New WEEKLY LONG Supports

The KOSPI 200 Index may have reached the end of its 2023 rally: a correction is probable in September, read the MRM LONG support prices to know...

Nico Rosti

Korea - Positioning in Ecopro, JYP Entertainment, Hanwha Ocean, Hanmi Semi, CJ Corp, E-Mart

Since 10 Aug, retail investors have net bought Jyp Entertainment and E Mart, foreigners have net bought Ecopro, Hanwha Ocean and Hanmi...

Brian Freitas

Price Gauge

52-week Range

Market Cap (USDm)

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Increasing Probability of Kakao Corp Losing Its Controlling Shareholding of Kakao Bank

In this insight, we discuss the increasing probability of Kakao Corp losing its controlling shareholding of Kakao Bank. Kakao Corp could be forced...

Douglas Kim

Medtronic's M&A of Eoflow Timeline Postponed

​The M&A between Eoflow and Medtronic has been postponed, with a new closing date set for January 3, 2024. The tender offer price may be lowered to...

Douglas Kim

Understanding Kakao Bank's Overhang Risk from Legal Consequences for Kakao Corp

This post provides a precise understanding of the potential overhang risk for Kakao Bank resulting from legal consequences for Kakao Corp.

Sanghyun Park

EQD | KOSPI 200 Index's Decisive Week: New WEEKLY LONG Supports

The KOSPI 200 Index may have reached the end of its 2023 rally: a correction is probable in September, read the MRM LONG support prices to know...

Nico Rosti

Korea - Positioning in Ecopro, JYP Entertainment, Hanwha Ocean, Hanmi Semi, CJ Corp, E-Mart

Since 10 Aug, retail investors have net bought Jyp Entertainment and E Mart, foreigners have net bought Ecopro, Hanwha Ocean and Hanmi...

Brian Freitas

The M&A between Eoflow and Medtronic has been postponed, with a new closing date set for January 3, 2024. The tender offer price may be lowered to...