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.

Thematic (Sector/Industry)

<ul>
<li>Money is again pouring into local rechargeable battery-themed ETFs. The AUMs of the major battery ETFs have increased by 20-35% over the past month.</li>
<li>The passive flow added in the past month to x ADTV was significant. The increase in the ETF AUM must have acted as a factor that aggravated the sector rally.</li>
<li>The current rally will closely correlate with AUM's growth pace. A 10% increase in AUM introduces a passive flow, on average, equivalent to 0.3-0.4x ADTV.</li>
</ul>


Money is again pouring into local rechargeable battery-themed ETFs. The AUMs of the major battery ETFs have increased by 20-35% over the past month.
The passive flow added in the past month to x ADTV was significant. The increase in the ETF AUM must have acted as a factor that aggravated the sector rally.
The current rally will closely correlate with AUM's growth pace. A 10% increase in AUM introduces a passive flow, on average, equivalent to 0.3-0.4x ADTV.


Investigating a Surge in AUM of Local Battery ETFs & Ongoing Sector Rally

Event-Driven

<ul>
<li>This ETF's AUM has stayed flat over the past three months, sitting at ₩1.3T. It has 28 constituents, and it is unlikely that there will be any addition/deletion.</li>
<li>SKIET is expected to have the most inflow relative to ADTV. Then, we have Ecopro BM, which will increase the number of shares through a rights offering.</li>
<li>On the other hand, among the top-tier stocks, SK Innovation, SKC, and Ecopro Co Ltd deserve our attention for shorting.</li>
</ul>


This ETF's AUM has stayed flat over the past three months, sitting at ₩1.3T. It has 28 constituents, and it is unlikely that there will be any addition/deletion.
SKIET is expected to have the most inflow relative to ADTV. Then, we have Ecopro BM, which will increase the number of shares through a rights offering.
On the other hand, among the top-tier stocks, SK Innovation, SKC, and Ecopro Co Ltd deserve our attention for shorting.


TIGER Theme ETF "Secondary Cell" Rebalancing Projections: SKIET, Ecopro BM, SKI, SKC, & Ecopro

Index Rebalance

<ul>
<li>The FnGuide Secondary Battery Index currently holds an AUM of ₩1.35T, and the next rebalancing implementation period is from June 13th to 15th.</li>
<li>Since these are same-sector stocks with a high cointegration level, they are suitable for narrow-window basket trading based on passive flow differences.</li>
<li>So, I would consider basket trading by targeting the large-cap constituents with a relatively significant passive flow: <a href="https://www.smartkarma.com/entities/sk-innovation-co-ltd" target="_blank" data-smartkarma-citation="entities:1268:1" rel="noopener">SK Innovation (096770)</a>, <a href="https://www.smartkarma.com/entities/sk-ie-technology" target="_blank" data-smartkarma-citation="entities:29207:1" rel="noopener">SK IE Technology (361610)</a>, <a href="https://www.smartkarma.com/entities/ecopro-bm-co-ltd" target="_blank" data-smartkarma-citation="entities:27873:1" rel="noopener">Ecopro BM (247540)</a>, &amp; <a href="https://www.smartkarma.com/entities/ecopro-co-ltd" target="_blank" data-smartkarma-citation="entities:19029:1" rel="noopener">Ecopro (086520)</a> </li>
</ul>


The FnGuide Secondary Battery Index currently holds an AUM of ₩1.35T, and the next rebalancing implementation period is from June 13th to 15th.
Since these are same-sector stocks with a high cointegration level, they are suitable for narrow-window basket trading based on passive flow differences.
So, I would consider basket trading by targeting the large-cap constituents with a relatively significant passive flow: SK Innovation (096770), SK IE Technology (361610), Ecopro BM (247540), &amp; Ecopro (086520) 


FnGuide Secondary Battery Index (KODEX ETF) Rebalancing Preview

<ul>
<li>Ecopro BM announced a ₩0.5T rights offer: 1.6M new ordinary shares at a preliminary offering price of ₩310,300. In addition, there will also be a 1-to-3 bonus share issuance.</li>
<li>In outright Long trading aiming for a 20% discount, one thing to keep in mind is bonus issues. Post-bonus issue price correction will likely be more substantial this time.</li>
<li>
 We should aim at outright shorting as moving into the bonus issue ex-rights date while watching Ecopro's share price upward trend and volatility during this event.</li>
</ul>


Ecopro BM announced a ₩0.5T rights offer: 1.6M new ordinary shares at a preliminary offering price of ₩310,300. In addition, there will also be a 1-to-3 bonus share issuance.
In outright Long trading aiming for a 20% discount, one thing to keep in mind is bonus issues. Post-bonus issue price correction will likely be more substantial this time.

 We should aim at outright shorting as moving into the bonus issue ex-rights date while watching Ecopro's share price upward trend and volatility during this event.


Ecopro BM Offering: Deal Summary & Trading Dynamics

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

<ul>
<li>After the market close today, Ecopro BM announced a rights offering worth 500 billion won as well as a bonus issue of three new shares for one existing share.</li>
<li>The tentative rights offering price is 310,300 won, which is 27% lower than current price of 423,800 won.</li>
<li>Ecopro BM's valuations remain stretched with its shares trading at high multiples and we believe there could be some further weakness in its share price in the coming weeks. </li>
</ul>


After the market close today, Ecopro BM announced a rights offering worth 500 billion won as well as a bonus issue of three new shares for one existing share.
The tentative rights offering price is 310,300 won, which is 27% lower than current price of 423,800 won.
Ecopro BM's valuations remain stretched with its shares trading at high multiples and we believe there could be some further weakness in its share price in the coming weeks. 


Ecopro BM Rights Offering Worth 500 Billion Won

South Korea

Ecopro Co., Ltd. specializes in developing chemical absorbent and NDC (Nano Carbon Ball) in the field of environmental materials for the prevention of air pollution.  The Company's products include environment-related chemical filters, second battery materials, and CO catalyst.

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Ecopro Co Ltd (086520 KS)

Investigating a Surge in AUM of Local Battery ETFs & Ongoing Sector Rally

This post investigates a recent surge in AUM of Korea's local secondary battery ETFs and how it may correlate with the ongoing sector rally.

Sanghyun Park

TIGER Theme ETF "Secondary Cell" Rebalancing Projections: SKIET, Ecopro BM, SKI, SKC, & Ecopro

This post projects the upcoming rebalancing of the TIGER Theme ETF "Secondary Cell": SKIET, Ecopro BM, SKI, SKC, & Ecopro.

Sanghyun Park

FnGuide Secondary Battery Index (KODEX ETF) Rebalancing Preview

This post previews the FnGuide Secondary Battery Index rebalancing in June. The tradable names at this point are SK Innovation, SKIET, Ecopro BM,...

Sanghyun Park

Ecopro BM Offering: Deal Summary & Trading Dynamics

This post details Ecopro BM's ₩0.5T rights offering with a 1-to-3 bonus share issuance, announced late yesterday. It then discusses trading...

Sanghyun Park

Ecopro BM Rights Offering Worth 500 Billion Won

After the market close today, Ecopro BM announced a rights offering worth 500 billion won as well as a bonus issue of three new shares for one...

Douglas Kim

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