Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

<p>It was announced on 15 October that a consortium led by <a href="https://www.smartkarma.com/entities/krafton-inc" target="_blank" data-smartkarma-citation="entities:28956:1" rel="noopener"> Krafton Inc (259960 KS)</a> plans to purchase a large property in Seoul for more than<a href="https://moneys.mt.co.kr/news/mwView.php?no=2021101517518088669" target="_blank" rel="noopener"> 1 trillion won. </a>CBRE is the advisory firm in this sale. The Krafton-Mirae Asset Managment consortium has been selected as the preferred bidder for this property located in Seongsu-dong, Seoul (currently owned by <a href="https://www.smartkarma.com/entities/e-mart-inc" target="_blank" data-smartkarma-citation="entities:6993:1" rel="noopener">E Mart Inc (139480 KS).</a> Krafton and Emart are expected to sign a MOU for this deal next week.</p><div class="content-highlight"><p><strong>We believe that Krafton purchasing a large piece of property in Seoul is likely to have a negative impact on its share price.</strong> Although Krafton is a cash rich company with nearly 4.5 trillion won in net cash post the IPO, it may need to spend about 500 billion won to 750 billion won in investment in this large property in Seong-su dong, Seoul. Many investors will not like this deal as they would rather have Krafton invest in its core gaming business (internally or through acquisitions).</p></div>

It was announced on 15 October that a consortium led by  Krafton Inc (259960 KS) plans to purchase a large property in Seoul for more than 1 trillion won. CBRE is the advisory firm in this sale. The Krafton-Mirae Asset Managment consortium has been selected as the preferred bidder for this property located in Seongsu-dong, Seoul (currently owned by E Mart Inc (139480 KS). Krafton and Emart are expected to sign a MOU for this deal next week.We believe that Krafton purchasing a large piece of property in Seoul is likely to have a negative impact on its share price. Although Krafton is a cash rich company with nearly 4.5 trillion won in net cash post the IPO, it may need to spend about 500 billion won to 750 billion won in investment in this large property in Seong-su dong, Seoul. Many investors will not like this deal as they would rather have Krafton invest in its core gaming business (internally or through acquisitions).

Krafton Consortium Plans to Buy a Large Property in Seoul from Emart for More than 1 Trillion Won

<p><strong><a href="https://www.smartkarma.com/entities/douzone-bizon-co-ltd" target="_blank" data-smartkarma-citation="entities:20161:1" rel="noopener">Douzone Bizon (012510 KS)</a> has two major catalysts (Internet only bank for SMEs and accounts receivable factoring business) right now that is driving its share price higher.</strong></p><p>The huge success of the <a href="https://www.smartkarma.com/entities/kakaobank-corp" target="_blank" data-smartkarma-citation="entities:33501:1" rel="noopener">KakaoBank (323410 KS)</a> IPO has given higher spotlight on companies that could become competitive threats in the Internet banking industry in Korea. Douzone Bizon in partnership with Shinhan Bank has the capability to become one of the major players in the Internet bank industry dedicated to the SME sector. Douzon Bizon's emphasis is not on the retail Internet banking but rather on the SMEs corporate related Internet banking services. </p><p>After Bain Capital became the second largest shareholder of the company in March 2021, the share price of the company fell nearly 25% (reaching low of 75,800 won on 20 August). However, its share price has rebounded strongly in the past month, driven by these two catalysts. </p><div class="content-highlight">
<p>Given the positive impact from the two key catalysts (Internet only bank for SMEs and accounts receivable factoring business), we believe that the market is likely to attach higher valuation multiples on the company in the coming weeks. As such, we believe that Douzone Bizon could continue to strongly outperform the market in the rest of 2021.</p>
<p>The company's shares have traded as high as 57.6x P/E in the past four years. If we apply this multiple on the consensus net profit of 75.6 billion won in 2022, this would imply a market cap of 4.4 trillion won (143,500 won per share), which is 32% higher than current share price. </p>
</div>

Douzone Bizon (012510 KS) has two major catalysts (Internet only bank for SMEs and accounts receivable factoring business) right now that is driving its share price higher.The huge success of the KakaoBank (323410 KS) IPO has given higher spotlight on companies that could become competitive threats in the Internet banking industry in Korea. Douzone Bizon in partnership with Shinhan Bank has the capability to become one of the major players in the Internet bank industry dedicated to the SME sector. Douzon Bizon's emphasis is not on the retail Internet banking but rather on the SMEs corporate related Internet banking services. After Bain Capital became the second largest shareholder of the company in March 2021, the share price of the company fell nearly 25% (reaching low of 75,800 won on 20 August). However, its share price has rebounded strongly in the past month, driven by these two catalysts. 
Given the positive impact from the two key catalysts (Internet only bank for SMEs and accounts receivable factoring business), we believe that the market is likely to attach higher valuation multiples on the company in the coming weeks. As such, we believe that Douzone Bizon could continue to strongly outperform the market in the rest of 2021.
The company's shares have traded as high as 57.6x P/E in the past four years. If we apply this multiple on the consensus net profit of 75.6 billion won in 2022, this would imply a market cap of 4.4 trillion won (143,500 won per share), which is 32% higher than current share price. 


Douzone Bizon: Internet Bank for SMEs and Accounts Receivables Factoring Driving Share Price Higher

Event-Driven

<p>In this insight, we discuss the stocks that could get included or excluded in the November 2021 KOSPI 200 rebalance. We highlight 15 stocks that could get included and 10 stocks that could get excluded in the upcoming KOSPI 200 rebalance.</p><div class="content-highlight">
<p>This rebalance of the KOSPI 200 strategy is a type of<strong> momentum-driven strategy.</strong> The 15 stocks that we think could get included in the next KOSPI 200 rebalance have generated strong share price performances <strong>(up 55% on average in the past six months</strong>). </p>
<p>On the other hand, the 10 stocks which we think could get excluded in the next KOSPI 200 rebalance (the bottom 5% of KOSPI 200 index in terms of market cap) have done much worse in terms of their share price performance (<strong>down 6.1% on average in the past six months</strong>). </p>
</div>

In this insight, we discuss the stocks that could get included or excluded in the November 2021 KOSPI 200 rebalance. We highlight 15 stocks that could get included and 10 stocks that could get excluded in the upcoming KOSPI 200 rebalance.
This rebalance of the KOSPI 200 strategy is a type of momentum-driven strategy. The 15 stocks that we think could get included in the next KOSPI 200 rebalance have generated strong share price performances (up 55% on average in the past six months). 
On the other hand, the 10 stocks which we think could get excluded in the next KOSPI 200 rebalance (the bottom 5% of KOSPI 200 index in terms of market cap) have done much worse in terms of their share price performance (down 6.1% on average in the past six months). 


Potential Changes of KOSPI 200 Index Components in the November 2021 Rebalance

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.

<p>Starting this year, KRX will rebalance the KOSPI size index series (LargeCap, MidCap, and SmallCap) twice a year. Until last year, it was done once a year in March (the option expiration date). <span>However, from this year, the rebalancing is done twice a year, in March and September.</span></p><div class="content-highlight"><ul>
<li><strong>The screening method is simple and clear. It is based on the 3-month average daily market cap.</strong></li>
<li><strong>LargeCap includes 1st to 100th, and MidCap takes 101st to 300th.</strong></li>
<li><strong>The screening base date is the last trading day of February and August. So, this September rebalancing review period is June 1 to August 31.</strong></li>
</ul></div><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/227/642/original/Screen+Shot+2021-09-02+at+10.06.47+PM.png?1630634901" class="editor-image img-responsive" data-smartkarma-image-id="227642"></figure></section>

Starting this year, KRX will rebalance the KOSPI size index series (LargeCap, MidCap, and SmallCap) twice a year. Until last year, it was done once a year in March (the option expiration date). However, from this year, the rebalancing is done twice a year, in March and September.
The screening method is simple and clear. It is based on the 3-month average daily market cap.
LargeCap includes 1st to 100th, and MidCap takes 101st to 300th.
The screening base date is the last trading day of February and August. So, this September rebalancing review period is June 1 to August 31.


KOSPI LargeCap & MidCap Rebalancing Preview on September 9

<h2>Rebalancing results</h2><p>Below is the official result of the regular rebalancing in September for the KRX BBIG K_New Deal Index.</p><div class="content-highlight"><p><strong>Of course, the big changes are Krafton and SK Bioscience in the main index. And SKIET's inclusion in the Secondary Battery sub-index also deserves special attention.</strong></p></div><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
<col width="100">
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr><td colspan="5" data-sheets-value='{"1":2,"2":"Constituents Change of KRX BBIG K-New Deal Index"}'>Constituents Change of KRX BBIG K-New Deal Index</td></tr>
<tr>
<td rowspan="2" data-sheets-value='{"1":2,"2":"Index"}'><div>Index</div></td>
<td colspan="2" style="text-align: center;" data-sheets-value='{"1":2,"2":"Addition"}'>Addition</td>
<td colspan="2" style="text-align: center;" data-sheets-value='{"1":2,"2":"Deletion"}'>Deletion</td>
</tr>
<tr>
<td style="text-align: left;" data-sheets-value='{"1":2,"2":"Ticker"}'>Ticker</td>
<td style="text-align: left;" data-sheets-value='{"1":2,"2":"Name"}'>Name</td>
<td style="text-align: left;" data-sheets-value='{"1":2,"2":"Ticker"}'>Ticker</td>
<td style="text-align: left;" data-sheets-value='{"1":2,"2":"Name"}'>Name</td>
</tr>
<tr>
<td rowspan="2" data-sheets-value='{"1":2,"2":"KRX BBIG K_New Deal Index"}'><div><strong>KRX BBIG K_New Deal</strong></div></td>
<td style="text-align: left;" data-sheets-value='{"1":2,"2":"302440"}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]' data-sheets-formula='="302440"'><strong>302440</strong></td>
<td style="text-align: left;" data-sheets-value='{"1":2,"2":"SK Bioscience Co Ltd"}' data-sheets-formula='=googlefinance(R[0]C[-1], "name")'><strong>SK Bioscience</strong></td>
<td style="text-align: left;" data-sheets-value='{"1":2,"2":"302440"}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]' data-sheets-formula='="302440"'><strong>302440</strong></td>
<td style="text-align: left;" data-sheets-value='{"1":2,"2":"SK Bioscience Co Ltd"}' data-sheets-formula='=googlefinance(R[0]C[-1], "name")'><div><div><strong>SK Biopharm</strong></div></div></td>
</tr>
<tr>
<td style="text-align: left;" data-sheets-value='{"1":2,"2":"259960"}' data-sheets-formula='="259960"'><strong>259960</strong></td>
<td style="text-align: left;" data-sheets-value='{"1":2,"2":"Krafton Inc"}' data-sheets-formula='=googlefinance(R[0]C[-1], "name")'><strong>Krafton</strong></td>
<td style="text-align: left;" data-sheets-value='{"1":2,"2":"293490"}' data-sheets-formula='="293490"'><strong>293490</strong></td>
<td style="text-align: left;" data-sheets-value='{"1":2,"2":"Kakao Games Corp"}' data-sheets-formula='=googlefinance(R[0]C[-1], "name")'><div><div><strong>Kakao Games</strong></div></div></td>
</tr>
<tr>
<td><div></div></td>
<td colspan="4" style="text-align: left;"><div><div></div></div></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"KRX Secondary Battery K_New Deal Index"}'><strong>KRX Secondary Battery</strong></td>
<td style="text-align: left;" data-sheets-value='{"1":2,"2":"361610"}' data-sheets-formula='="361610"'><strong>361610</strong></td>
<td style="text-align: left;" data-sheets-value='{"1":2,"2":"SK IE Technology Co Ltd"}' data-sheets-formula='=googlefinance(R[0]C[-1], "name")'><strong>SK IE Technology</strong></td>
<td style="text-align: left;" data-sheets-value='{"1":2,"2":"278280"}' data-sheets-formula='="278280"'><strong>278280</strong></td>
<td style="text-align: left;" data-sheets-value='{"1":2,"2":"Chunbo Co Ltd"}' data-sheets-formula='=googlefinance(R[0]C[-1], "name")'><strong>Chunbo</strong></td>
</tr>
<tr>
<td rowspan="2" data-sheets-value='{"1":2,"2":"KRX Bio K_New Deal Index"}'><div>KRX Bio</div></td>
<td style="text-align: left;" data-sheets-value='{"1":2,"2":"302440"}' data-sheets-numberformat='[null,2,"₩#,##0.0B"]' data-sheets-formula='="302440"'>302440</td>
<td style="text-align: left;" data-sheets-value='{"1":2,"2":"SK Bioscience Co Ltd"}' data-sheets-formula='=googlefinance(R[0]C[-1], "name")'>SK Bioscience</td>
<td style="text-align: left;" data-sheets-value='{"1":2,"2":"019170"}' data-sheets-formula='="019170"'>019170</td>
<td style="text-align: left;" data-sheets-value='{"1":2,"2":"Shinpoong Pharmaceutical Co Ltd"}' data-sheets-formula='=googlefinance(R[0]C[-1], "name")'><div><div>Shinpoong Pharm</div></div></td>
</tr>
<tr>
<td style="text-align: left;" data-sheets-value='{"1":2,"2":"128940"}' data-sheets-formula='="128940"'>128940</td>
<td style="text-align: left;" data-sheets-value='{"1":2,"2":"HanmiPharm"}' data-sheets-formula='=googlefinance(R[0]C[-1], "name")'>HanmiPharm</td>
<td style="text-align: left;" data-sheets-value='{"1":2,"2":"096530"}' data-sheets-formula='="096530"'>096530</td>
<td style="text-align: left;" data-sheets-value='{"1":2,"2":"Seegene Inc"}' data-sheets-formula='=googlefinance(R[0]C[-1], "name")'>Seegene</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"KRX Internet K_New Deal Index"}'>KRX Internet</td>
<td style="text-align: left;" data-sheets-value='{"1":2,"2":"035600"}' data-sheets-formula='="035600"'>035600</td>
<td style="text-align: left;" data-sheets-value='{"1":2,"2":"KGInicis Co Ltd"}' data-sheets-formula='=googlefinance(R[0]C[-1], "name")'>KGInicis</td>
<td style="text-align: left;" data-sheets-value='{"1":2,"2":"131370"}' data-sheets-formula='="131370"'>131370</td>
<td style="text-align: left;" data-sheets-value='{"1":2,"2":"Rsupport Co Ltd"}' data-sheets-formula='=googlefinance(R[0]C[-1], "name")'><div><div>Rsupport</div></div></td>
</tr>
<tr>
<td rowspan="2" data-sheets-value='{"1":2,"2":"KRX Game K_New Deal Index"}'><div>KRX Game</div></td>
<td style="text-align: left;" data-sheets-value='{"1":2,"2":"259960"}' data-sheets-formula='="259960"'>259960</td>
<td style="text-align: left;" data-sheets-value='{"1":2,"2":"Krafton Inc"}' data-sheets-formula='=googlefinance(R[0]C[-1], "name")'>Krafton</td>
<td style="text-align: left;" data-sheets-value='{"1":2,"2":"112040"}' data-sheets-formula='="112040"'>112040</td>
<td style="text-align: left;" data-sheets-value='{"1":2,"2":"Wemade Co Ltd"}' data-sheets-formula='=googlefinance(R[0]C[-1], "name")'>Wemade</td>
</tr>
<tr>
<td style="text-align: left;" data-sheets-value='{"1":2,"2":"194480"}' data-sheets-formula='="194480"'>194480</td>
<td style="text-align: left;" data-sheets-value='{"1":2,"2":"Devsisters Corp"}' data-sheets-formula='=googlefinance(R[0]C[-1], "name")'>Devsisters</td>
<td style="text-align: left;" data-sheets-value='{"1":2,"2":"217270"}' data-sheets-formula='="217270"'>217270</td>
<td style="text-align: left;" data-sheets-value='{"1":2,"2":"Neptune Co"}' data-sheets-formula='=googlefinance(R[0]C[-1], "name")'>Neptune</td>
</tr>
<tr><td colspan="5" data-sheets-value='{"1":2,"2":"Source: KRX"}'>Source: KRX</td></tr>
</tbody>
</table><p><strong>The effective date is September 10, the same as the KOSPI 200 Fast Entry rebalancing. It means that Krafton will receive passive inflow from both KRX BBIG and KOSPI 200.</strong></p><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr><td colspan="2" rowspan="1" style="width: 746.008px;" data-sheets-value='{"1":2,"2":"Rebalancing schedule"}'>Rebalancing schedule</td></tr>
<tr>
<td style="width: 212.997px;" data-sheets-value='{"1":2,"2":"Rebalancing cycle"}'>Rebalancing cycle</td>
<td style="width: 533.011px;" data-sheets-value='{"1":2,"2":"Semi-annually"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'>Semi-annually</td>
</tr>
<tr>
<td style="width: 212.997px;" data-sheets-value='{"1":2,"2":"Rebalancing month"}'>Rebalancing month</td>
<td style="width: 533.011px;" data-sheets-value='{"1":2,"2":"March and September"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'><div>March and September</div></td>
</tr>
<tr>
<td style="width: 212.997px;" data-sheets-value='{"1":2,"2":"Implementation date"}'>Implementation date</td>
<td style="width: 533.011px;" data-sheets-value='{"1":2,"2":"The trading day following the last trading day for KOSPI 200 futures contracts"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'><div>The trading day following the last trading day for KOSPI 200 futures contracts</div></td>
</tr>
<tr>
<td style="width: 212.997px;" data-sheets-value='{"1":2,"2":"Next implementation date"}'>Next implementation date</td>
<td style="width: 533.011px;" data-sheets-value='{"1":2,"2":"September 10, 2021"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'><div>September 10, 2021</div></td>
</tr>
<tr>
<td style="width: 212.997px;" data-sheets-value='{"1":2,"2":"Rebalancing trading"}'>Rebalancing trading</td>
<td style="width: 533.011px;" data-sheets-value='{"1":2,"2":"At the close on September 9, 2021"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'><div>At the close on September 9, 2021</div></td>
</tr>
<tr>
<td style="width: 212.997px;" data-sheets-value='{"1":2,"2":"Screening base date"}'>Screening base date</td>
<td style="width: 533.011px;" data-sheets-value='{"1":2,"2":"The last trading day of the month preceding the date of regular rebalancing"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'><div>The last trading day of the month preceding the date of regular rebalancing.</div></td>
</tr>
<tr>
<td style="width: 212.997px;" data-sheets-value='{"1":2,"2":"Screening period"}'>Screening period</td>
<td style="width: 533.011px;" data-sheets-value='{"1":2,"2":"The three months preceding the screening base date"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'><div>The three months preceding the screening base date</div></td>
</tr>
<tr><td colspan="2" rowspan="1" style="width: 746.008px;" data-sheets-value='{"1":2,"2":"Source: KRX &amp; WISE Index"}' data-sheets-numberformat='{"1":2,"2":"₩#,##0.0B"}'>Source: KRX &amp; WISE Index</td></tr>
</tbody>
</table><p>Below are the AUMs of the ETFs tracking these indices. Only the main index and the secondary battery sub-index have a meaningful size of AUM. And both indices' AUMs have decreased from the peak in the first half of this year.</p><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr>
<td data-sheets-value='{"1":2,"2":"ETFs tracking BBIG indices"}'>ETFs tracking BBIG indices</td>
<td data-sheets-value='{"1":2,"2":"Index"}'>Index</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Ticker"}'>Ticker</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"AUM"}'>AUM</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Mirae Asset TIGER KRX BBIG K-New Deal ETF"}' data-sheets-formula='=googlefinance(R[0]C[2], "name")'>Mirae Asset TIGER KRX BBIG K-New Deal ETF</td>
<td rowspan="4" data-sheets-value='{"1":2,"2":"KRX BBIG K-New Deal Index"}'><div><strong>KRX BBIG K-New Deal Index</strong></div></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":364960}'>364960</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":441.35}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[0]C[1]*R[0]C[2]/1000000000">₩441.4B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Hana Financial Investment Hana KRX BBIG K-New Deal ETN 3"}' data-sheets-formula='=googlefinance(R[0]C[2], "name")'>Hana Financial Investment Hana KRX BBIG K-New Deal ETN 3</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":700003}'>700003</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":10.31}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[0]C[1]*R[0]C[2]/1000000000">₩10.3B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"TIMEFOLIO TIMEFOLIO BBIG Active ETF"}' data-sheets-formula='=googlefinance(R[0]C[2], "name")'>TIMEFOLIO TIMEFOLIO BBIG Active ETF</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":385710}'>385710</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":27.564}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[0]C[1]*R[0]C[2]/1000000000">₩27.6B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"- Total"}' data-sheets-numberformat='[null,2,"#,##0.00",1]'><strong>- Total</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"-"}'><strong>-</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":479.22400000000005}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=sum(R[-3]C[0]:R[-1]C[0])"><strong>₩479.2B</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Mirae Asset TIGER KRX Second Battery K-NewDeal ETF"}' data-sheets-formula='=googlefinance(R[0]C[2], "name")'>Mirae Asset TIGER KRX Second Battery K-NewDeal ETF</td>
<td data-sheets-value='{"1":2,"2":"KRX Secondary Battery K-New Deal Index"}' data-sheets-numberformat='[null,2,"#,##0.0"]'><strong>KRX Secondary Battery K-New Deal Index</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":364980}'>364980</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":647.235}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[0]C[1]*R[0]C[2]/1000000000"><strong>₩647.2B</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Mirae Asset TIGER KRX BIO K-New Deal ETF"}' data-sheets-formula='=googlefinance(R[0]C[2], "name")'>Mirae Asset TIGER KRX BIO K-New Deal ETF</td>
<td data-sheets-value='{"1":2,"2":"KRX Bio K-New Deal Index"}' data-sheets-numberformat='[null,2,"#,##0.0"]'><strong>KRX Bio K-New Deal Index</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":364970}'>364970</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":100.53}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[0]C[1]*R[0]C[2]/1000000000"><strong>₩100.5B</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Mirae Asset TIGER KRX Internet K-New Deal ETF"}' data-sheets-formula='=googlefinance(R[0]C[2], "name")'>Mirae Asset TIGER KRX Internet K-New Deal ETF</td>
<td data-sheets-value='{"1":2,"2":"KRX Internet K-New Deal Index"}' data-sheets-numberformat='[null,2,"#,##0.0"]'><strong>KRX Internet K-New Deal Index</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":365000}'>365000</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":64.86725}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[0]C[1]*R[0]C[2]/1000000000"><strong>₩64.9B</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Mirae Asset TIGER KRX Game K-New Deal ETF"}' data-sheets-formula='=googlefinance(R[0]C[2], "name")'>Mirae Asset TIGER KRX Game K-New Deal ETF</td>
<td data-sheets-value='{"1":2,"2":"KRX Game K-New Deal Index"}' data-sheets-numberformat='[null,2,"#,##0.0"]'><strong>KRX Game K-New Deal Index</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":364990}'>364990</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":31.89275}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[0]C[1]*R[0]C[2]/1000000000"><strong>₩31.9B</strong></td>
</tr>
<tr><td colspan="4">Source: KRX</td></tr>
</tbody>
</table><hr><h2>Regarding Krafton's inclusion:</h2><p>Krafton was listed after the review cutoff date (July 31). Nonetheless, KRX decided to include it in this rebalancing. Then, did KRX break its own rule? Well, it did not.</p><p><strong>Here is my explanation which I posted previously, concerning this issue.</strong></p><div class="content-highlight">
<p>First of all, this BBIG index does not have a Fast Entry clause. So, KRX was internally debating whether to apply the review cutoff date to newly listed stocks with large market caps. (This was what I heard from KRX directly.) Since this index has few constituents, if newly listed stocks with large market caps are excluded from the index for nearly six months, the resulting disparity between the index and the actual sector may become too large, and KRX is also concerned about this.</p>
<p>Therefore, KRX said that it would decide on Fast Entry of those stocks with large market caps, such as Krafton, Kakao Pay, and LG Energy Solution, at the time of regular rebalancing in consultation with the ETF operators (Mirae Asset). In the end, it turned out that the outcome of the KRX &amp; Mirae Asset discussion on the Fast Entry of Krafton was Go, which wasn't outside the scope of the KRX Index methodology at all.</p>
</div>

Rebalancing resultsBelow is the official result of the regular rebalancing in September for the KRX BBIG K_New Deal Index.Of course, the big changes are Krafton and SK Bioscience in the main index. And SKIET's inclusion in the Secondary Battery sub-index also deserves special attention.








Constituents Change of KRX BBIG K-New Deal Index

Index
Addition
Deletion


Ticker
Name
Ticker
Name


KRX BBIG K_New Deal
302440
SK Bioscience
302440
SK Biopharm


259960
Krafton
293490
Kakao Games






KRX Secondary Battery
361610
SK IE Technology
278280
Chunbo


KRX Bio
302440
SK Bioscience
019170
Shinpoong Pharm


128940
HanmiPharm
096530
Seegene


KRX Internet
035600
KGInicis
131370
Rsupport


KRX Game
259960
Krafton
112040
Wemade


194480
Devsisters
217270
Neptune

Source: KRX

The effective date is September 10, the same as the KOSPI 200 Fast Entry rebalancing. It means that Krafton will receive passive inflow from both KRX BBIG and KOSPI 200.





Rebalancing schedule

Rebalancing cycle
Semi-annually


Rebalancing month
March and September


Implementation date
The trading day following the last trading day for KOSPI 200 futures contracts


Next implementation date
September 10, 2021


Rebalancing trading
At the close on September 9, 2021


Screening base date
The last trading day of the month preceding the date of regular rebalancing.


Screening period
The three months preceding the screening base date

Source: KRX &amp; WISE Index

Below are the AUMs of the ETFs tracking these indices. Only the main index and the secondary battery sub-index have a meaningful size of AUM. And both indices' AUMs have decreased from the peak in the first half of this year.








ETFs tracking BBIG indices
Index
Ticker
AUM


Mirae Asset TIGER KRX BBIG K-New Deal ETF
KRX BBIG K-New Deal Index
364960
₩441.4B


Hana Financial Investment Hana KRX BBIG K-New Deal ETN 3
700003
₩10.3B


TIMEFOLIO TIMEFOLIO BBIG Active ETF
385710
₩27.6B


- Total
-
₩479.2B


Mirae Asset TIGER KRX Second Battery K-NewDeal ETF
KRX Secondary Battery K-New Deal Index
364980
₩647.2B


Mirae Asset TIGER KRX BIO K-New Deal ETF
KRX Bio K-New Deal Index
364970
₩100.5B


Mirae Asset TIGER KRX Internet K-New Deal ETF
KRX Internet K-New Deal Index
365000
₩64.9B


Mirae Asset TIGER KRX Game K-New Deal ETF
KRX Game K-New Deal Index
364990
₩31.9B

Source: KRX

Regarding Krafton's inclusion:Krafton was listed after the review cutoff date (July 31). Nonetheless, KRX decided to include it in this rebalancing. Then, did KRX break its own rule? Well, it did not.Here is my explanation which I posted previously, concerning this issue.
First of all, this BBIG index does not have a Fast Entry clause. So, KRX was internally debating whether to apply the review cutoff date to newly listed stocks with large market caps. (This was what I heard from KRX directly.) Since this index has few constituents, if newly listed stocks with large market caps are excluded from the index for nearly six months, the resulting disparity between the index and the actual sector may become too large, and KRX is also concerned about this.
Therefore, KRX said that it would decide on Fast Entry of those stocks with large market caps, such as Krafton, Kakao Pay, and LG Energy Solution, at the time of regular rebalancing in consultation with the ETF operators (Mirae Asset). In the end, it turned out that the outcome of the KRX &amp; Mirae Asset discussion on the Fast Entry of Krafton was Go, which wasn't outside the scope of the KRX Index methodology at all.


KRX BBIG Rebalancing Results & Passive Impact Estimations: Watch Douzone Bizon

South Korea

Douzone Bizon Co., Ltd. develops and markets computer software.  The company develops MIS, ERP, e-Business Solutions, EFIS, SEM(Strategic Enterprise Management), BPS(Business Process Management), and ERM(Enterprise Risk Management). The Company's products target small and medium-sized enterprises.

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Douzone Bizon (012510 KS)

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