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>If short-selling accounts for more than 30% of total daily trade volume, it will be newly designated as an overheated short-selling stock, resulting in a one-day short-selling ban.</li>
<li>If the stock price falls by more than 5% on the day of the short-selling restriction, the restriction period is automatically extended by one more day.</li>
<li>We should pay attention to a possible increase in the trading volume of single-stock futures (SSF) due to short-selling bans, which can result in a more significant basis distortion.</li>
</ul>


If short-selling accounts for more than 30% of total daily trade volume, it will be newly designated as an overheated short-selling stock, resulting in a one-day short-selling ban.
If the stock price falls by more than 5% on the day of the short-selling restriction, the restriction period is automatically extended by one more day.
We should pay attention to a possible increase in the trading volume of single-stock futures (SSF) due to short-selling bans, which can result in a more significant basis distortion.


Revised Rules on Short Selling Restriction in Korea: Effective 3Q This Year

<ul>
<li>Among the local theme ETFs in Korea, the TIGER (FnGuide) Top 10 has the highest win rate on rebalancing flow trade.</li>
<li>LG Energy deserves the most attention at the next rebalancing event. If LG Chem disposes of some of its LG Energy shares, LG Energy can bypass those on the borderline.</li>
<li>In this case, Shinhan, the one on the borderline at this point, will face a passive flow of -0.65x ADTV, while LG Energy will receive +0.25x.</li>
</ul>


Among the local theme ETFs in Korea, the TIGER (FnGuide) Top 10 has the highest win rate on rebalancing flow trade.
LG Energy deserves the most attention at the next rebalancing event. If LG Chem disposes of some of its LG Energy shares, LG Energy can bypass those on the borderline.
In this case, Shinhan, the one on the borderline at this point, will face a passive flow of -0.65x ADTV, while LG Energy will receive +0.25x.


FnGuide Top 10 (TIGER ETF) Rebalancing Review & Preview: LG Energy's Potential Inclusion

<ul>
<li>With the screening period over (May 3-31), Shinhan IN/Celltrion OUT is virtually a foregone conclusion.</li>
<li>We should consider an individually-hedged approach, instead of a plain long/short, with a tightly moving-together peer, preferably on a single-day trading window.</li>
<li>I suggest using KB Financial and Celltrion Healthcare as hedges of LONG &amp; SHORT for Shinhan and Celltrion, respectively.</li>
</ul>


With the screening period over (May 3-31), Shinhan IN/Celltrion OUT is virtually a foregone conclusion.
We should consider an individually-hedged approach, instead of a plain long/short, with a tightly moving-together peer, preferably on a single-day trading window.
I suggest using KB Financial and Celltrion Healthcare as hedges of LONG &amp; SHORT for Shinhan and Celltrion, respectively.


FnGuide Top 10 Rebalancing: How We Trade Shinhan IN/Celltrion OUT

Global Healthcare Analyst

Tina Banerjee

Thematic (Sector/Industry)

<ul>
<li>With the declining number of daily new infections, most countries in APAC region are in process to relax their COVID-related restrictions and border re-opening.</li>
<li>While hospitals are the prime beneficiaries of re-opening, medical devices companies will also benefit from the resumption of elective surgeries. Monkeypox is not expected to have big adverse effect.</li>
<li>Investment thesis for four top picks in APAC healthcare sector remains intact, and their recent quarterly results depict their continued growth momentum.</li>
</ul>


With the declining number of daily new infections, most countries in APAC region are in process to relax their COVID-related restrictions and border re-opening.
While hospitals are the prime beneficiaries of re-opening, medical devices companies will also benefit from the resumption of elective surgeries. Monkeypox is not expected to have big adverse effect.
Investment thesis for four top picks in APAC healthcare sector remains intact, and their recent quarterly results depict their continued growth momentum.


APAC Healthcare – Good Bet on Re-Opening; Continued Strong Recovery in Top Picks

Index Rebalance

<ul>
<li>Celltrion Inc (068270 KS)'s deletion seems pretty much a foregone conclusion as its average float-adjusted market cap on May 3-19 is way below the next one in line.</li>
<li>Shinhan Financial (055550 KS) is the one to replace Celltrion based on the numbers so far. There is close to a ₩1T gap with the next one, POSCO (005490 KS).</li>
<li>In this rebalancing, the flow impact of the addition/deletion is even more significant. So, their share price fluctuations on June 10 will likely be more substantial than last time.</li>
</ul>


Celltrion Inc (068270 KS)'s deletion seems pretty much a foregone conclusion as its average float-adjusted market cap on May 3-19 is way below the next one in line.
Shinhan Financial (055550 KS) is the one to replace Celltrion based on the numbers so far. There is close to a ₩1T gap with the next one, POSCO (005490 KS).
In this rebalancing, the flow impact of the addition/deletion is even more significant. So, their share price fluctuations on June 10 will likely be more substantial than last time.


FnGuide Top 10 Rebalancing on June 10: More Substantial Flow Impact than Last Time

South Korea

Celltrion, Inc. produces and sells biosimilar products, as well as consignment processing services for other businesses.

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Celltrion (068270 KP)

Revised Rules on Short Selling Restriction in Korea: Effective 3Q This Year

This post details the new rules of short-selling restrictions announced today by the Financial Services Commission of Korea.

Sanghyun Park

FnGuide Top 10 (TIGER ETF) Rebalancing Review & Preview: LG Energy's Potential Inclusion

This post reviews the trading pattern seen in the last rebalancing of the FnGuide Top 10 Index (TIGER ETF) and previews the rebalancing flow...

Sanghyun Park

FnGuide Top 10 Rebalancing: How We Trade Shinhan IN/Celltrion OUT

This post looks at the FnGuide Top 10 Index (TIGER ETF) rebalancing results as we are past the screening period and suggests a trading approach on...

Sanghyun Park

APAC Healthcare – Good Bet on Re-Opening; Continued Strong Recovery in Top Picks

Amid the declining new COVID infections and economy re-opening, top picks in APAC healthcare sector are poised to benefit. Their recent quarterly...

Tina Banerjee

FnGuide Top 10 Rebalancing on June 10: More Substantial Flow Impact than Last Time

This post looks at the current status of the FnGuide Top 10 Index rebalancing as we are halfway through the completion of the review period.

Sanghyun Park

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