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.

Index Rebalance

<ul>
<li>Nine constituents will likely face an increase in the float rate: five stocks for the sale of the majority shareholder's shares and four names for the IPO lockup release.</li>
<li>Kakao Bank (6.35x), LG Corp (003550 KS) (2.62x), Krafton (2.09x), and Woori Financial Group (316140 KS) (1.74x) are expected to have the most significant impact.</li>
<li>In general, float rate changes show price movement by passive flow similar to new changes (adds/deletes). So, we need to consider gradually building up positions two months before the rebalancing.</li>
</ul>


Nine constituents will likely face an increase in the float rate: five stocks for the sale of the majority shareholder's shares and four names for the IPO lockup release.
Kakao Bank (6.35x), LG Corp (003550 KS) (2.62x), Krafton (2.09x), and Woori Financial Group (316140 KS) (1.74x) are expected to have the most significant impact.
In general, float rate changes show price movement by passive flow similar to new changes (adds/deletes). So, we need to consider gradually building up positions two months before the rebalancing.


KOSPI 200 Index Rebalancing: Constituents Subject to Float Rate Increase

Event-Driven

<ul>
<li>KOSPI 200's June rebalancing review period is six months, from November 1 to April 30. So, we are now over 70% of the review period.</li>
<li>The addition result is similar to the screening results last month. However, one stock was newly screened. Hana Tour Service sits at the filtering borderline within the Consumer Discretionary Sector.</li>
<li>As for deletions, Bukwang Pharmaceutical is screened in the healthcare sector instead of Yungjin Pharmaceutical. S&amp;T Motiv in the Consumer Discretionary Sector is additionally listed as a deletion candidate.</li>
</ul>


KOSPI 200's June rebalancing review period is six months, from November 1 to April 30. So, we are now over 70% of the review period.
The addition result is similar to the screening results last month. However, one stock was newly screened. Hana Tour Service sits at the filtering borderline within the Consumer Discretionary Sector.
As for deletions, Bukwang Pharmaceutical is screened in the healthcare sector instead of Yungjin Pharmaceutical. S&amp;T Motiv in the Consumer Discretionary Sector is additionally listed as a deletion candidate.


KOSPI 200 Rebalancing Screening: Few Noticeable Changes in the Race

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

<ul>
<li>In this insight, we discuss the potential additions and deletions in the upcoming June 2022 KOSPI200 rebalance.</li>
<li>These top 10potential inclusionsare down on average 4.4% YTD, outperforming KOSPI which is down 10.1% YTD.</li>
<li>These top 10 potential exclusions are down on average 12.3% YTD, underperforming KOSPI which is down 10.1% YTD.</li>
</ul>


In this insight, we discuss the potential additions and deletions in the upcoming June 2022 KOSPI200 rebalance.
These top 10potential inclusionsare down on average 4.4% YTD, outperforming KOSPI which is down 10.1% YTD.
These top 10 potential exclusions are down on average 12.3% YTD, underperforming KOSPI which is down 10.1% YTD.


Initial Thoughts on the KOSPI200 Rebalance in June 2022

<ul>
<li>KRX calculates floats fairly aggressively even in new IPOs. This was symbolically shown in the case of Kakao Pay, which received a 35% float rate.</li>
<li>So, we need a trading setup that raises the float rate prediction range in future KOSPI 200 Fast Entry cases.</li>
<li>Considering that rebalancing trading that occurs on the implementation day is now partially digested in regular trading hours, we need to consider getting out positions before the closing auction hours.</li>
</ul>


KRX calculates floats fairly aggressively even in new IPOs. This was symbolically shown in the case of Kakao Pay, which received a 35% float rate.
So, we need a trading setup that raises the float rate prediction range in future KOSPI 200 Fast Entry cases.
Considering that rebalancing trading that occurs on the implementation day is now partially digested in regular trading hours, we need to consider getting out positions before the closing auction hours.


KOSPI 200 New Entrants: KRX-Concluded Float Rates & Rebalancing Trading Pattern Today

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

HD Hyundai Heavy Industries  / Index Rebalance

The Korea Exchange (KRX) will announce the results of the December 2021 review of the <a href="https://www.smartkarma.com/entities/korea-stock-exchange-kospi-200-index" target="_blank" data-smartkarma-citation="entities:26021:1" rel="noopener">Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX)</a> later this month and the constituent changes will be effective after the close of trading on 9 December.With the review period now complete, we see 7 potential inclusions (5 regular + 2 Fast Entry) and 8 potential deletions from the index. There is one extra deletion to keep the number of index constituents at 200 following the inclusion of SK Square in the index post its spin-off from <a href="https://www.smartkarma.com/entities/sk-telecom-co-ltd-bbccd86c-474d-4a4d-946d-10e911a225a2" target="_blank" data-smartkarma-citation="entities:395:1" rel="noopener">SK Telecom (017670 KS)</a>.The potential regular inclusions are <a href="https://www.smartkarma.com/entities/f-f-co-ltd-new" target="_blank" data-smartkarma-citation="entities:33479:1" rel="noopener">F&amp;F (383220 KS)</a>, <a href="https://www.smartkarma.com/entities/skckolonpi-inc" target="_blank" data-smartkarma-citation="entities:9196:1" rel="noopener">Skckolonpi Inc (178920 KS)</a>, <a href="https://www.smartkarma.com/entities/meritz-financial-group-inc" target="_blank" data-smartkarma-citation="entities:11776:1" rel="noopener">Meritz Financial Group (138040 KS)</a>, <a href="https://www.smartkarma.com/entities/sl-corp" target="_blank" data-smartkarma-citation="entities:20694:1" rel="noopener">SL Corp (005850 KS)</a> and <a href="https://www.smartkarma.com/entities/myoung-shin-industrial-co-ltd" target="_blank" data-smartkarma-citation="entities:29698:1" rel="noopener">Myoung Shin Industrial Co.,Ltd (009900 KS)</a> while the potential Fast Entry inclusions are <a href="https://www.smartkarma.com/entities/hyundai-heavy-industries-co-ltd" target="_blank" data-smartkarma-citation="entities:33808:1" rel="noopener">Hyundai Heavy Industries (329180 KS)</a> and <a href="https://www.smartkarma.com/entities/kakao-pay-corp" target="_blank" data-smartkarma-citation="entities:29675:1" rel="noopener">Kakao Pay (377300 KS)</a>.The potential deletions are <a href="https://www.smartkarma.com/entities/samyang-foods-co-ltd" target="_blank" data-smartkarma-citation="entities:9100:1" rel="noopener">Samyang Foods (003230 KS)</a>, <a href="https://www.smartkarma.com/entities/ilyang-pharmaceutical-co-ltd" target="_blank" data-smartkarma-citation="entities:2789:1" rel="noopener">Ilyang Pharmaceutical Co., (007570 KS)</a>, <a href="https://www.smartkarma.com/entities/lx-holdings" target="_blank" data-smartkarma-citation="entities:33384:1" rel="noopener">LX Holdings (383800 KS)</a>, <a href="https://www.smartkarma.com/entities/lotte-himart-co-ltd" target="_blank" data-smartkarma-citation="entities:12895:1" rel="noopener">Lotte Himart (071840 KS)</a>, <a href="https://www.smartkarma.com/entities/f-f-co-ltd" target="_blank" data-smartkarma-citation="entities:15983:1" rel="noopener">F&amp;F Co Ltd (007700 KS)</a>, <a href="https://www.smartkarma.com/entities/dongwon-f-b-co-ltd" target="_blank" data-smartkarma-citation="entities:3274:1" rel="noopener">Dongwon F&amp;B (049770 KS)</a>, <a href="https://www.smartkarma.com/entities/lx-hausys-ltd" target="_blank" data-smartkarma-citation="entities:11613:1" rel="noopener">LX Hausys Ltd (108670 KS)</a> and <a href="https://www.smartkarma.com/entities/nexen-tire-corp" target="_blank" data-smartkarma-citation="entities:14206:1" rel="noopener">Nexen Tire Corp (002350 KS)</a>.There are quite a few stocks that are close adds but just miss out on making the 85% cumulative market cap cut or the 90% of current stocks from the sector in the index cut.The potential inclusions have outperformed the potential deletions since August. After giving up some gains and then consolidating, the potential inclusion have started to outperform the potential deletions again over the last week.

The Korea Exchange (KRX) will announce the results of the December 2021 review of the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) later this month and the constituent changes will be effective after the close of trading on 9 December.With the review period now complete, we see 7 potential inclusions (5 regular + 2 Fast Entry) and 8 potential deletions from the index. There is one extra deletion to keep the number of index constituents at 200 following the inclusion of SK Square in the index post its spin-off from SK Telecom (017670 KS).The potential regular inclusions are F&amp;F (383220 KS), Skckolonpi Inc (178920 KS), Meritz Financial Group (138040 KS), SL Corp (005850 KS) and Myoung Shin Industrial Co.,Ltd (009900 KS) while the potential Fast Entry inclusions are Hyundai Heavy Industries (329180 KS) and Kakao Pay (377300 KS).The potential deletions are Samyang Foods (003230 KS), Ilyang Pharmaceutical Co., (007570 KS), LX Holdings (383800 KS), Lotte Himart (071840 KS), F&amp;F Co Ltd (007700 KS), Dongwon F&amp;B (049770 KS), LX Hausys Ltd (108670 KS) and Nexen Tire Corp (002350 KS).There are quite a few stocks that are close adds but just miss out on making the 85% cumulative market cap cut or the 90% of current stocks from the sector in the index cut.The potential inclusions have outperformed the potential deletions since August. After giving up some gains and then consolidating, the potential inclusion have started to outperform the potential deletions again over the last week.

KOSPI200 Index Rebalance Preview:  Review Period Complete & Trades Performing Well

South Korea

Bukwang Pharmaceutical Co., Ltd. produces oral hygienic, and pharmaceutical products.  The Company's products include over-the-counter drugs, toothpastes, and toothbrushes.

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Bukwang Pharmaceutical (003000 KS)

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Sanghyun Park

Initial Thoughts on the KOSPI200 Rebalance in June 2022

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Sanghyun Park

KOSPI200 Index Rebalance Preview: Review Period Complete & Trades Performing Well

The review period for the KOSPI200 Dec rebalance is complete and we see 6 potential adds and 8 potential deletes. Most are high probability changes...

Brian Freitas

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