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>I spoke directly with the KRX official overseeing KOSDAQ 150, who confirmed that Fadu’s June exclusion was due to ongoing litigation, putting December inclusion in question.</li>
<li>He also confirmed the six-month normal trading record is irrelevant; Fadu’s inclusion hinges on the court case, with a ruling unlikely before early next year, effectively ruling out December entry.</li>
<li>Simmtech could enter TIGER Semis Top 10 if FnGuide reclassifies it as Semiconductors in November’s MKF500 rebalance, potentially triggering front running and passive flow positioning.</li>
</ul>


I spoke directly with the KRX official overseeing KOSDAQ 150, who confirmed that Fadu’s June exclusion was due to ongoing litigation, putting December inclusion in question.
He also confirmed the six-month normal trading record is irrelevant; Fadu’s inclusion hinges on the court case, with a ruling unlikely before early next year, effectively ruling out December entry.
Simmtech could enter TIGER Semis Top 10 if FnGuide reclassifies it as Semiconductors in November’s MKF500 rebalance, potentially triggering front running and passive flow positioning.


What I've Found on Fadu and Simmtech: Key Near Term Passive Flow Plays

Event-Driven

<ul>
<li>As of yesterday, combined AUM hit KRW 1tn, with KoAct alone near KRW 800bn, already rivaling top local equity active ETFs just three sessions post-listing.</li>
<li>KRX is already running tight liquidity checks with local ETF and broker desks, signaling massive passive flows and early, intense pre-positioning ahead of the June KOSDAQ 150 rebalance.</li>
<li>Non-KOSDAQ 150 names held by these ETFs, many KOSDAQ 150 inclusion candidates, could see amplified upside, making tracking active fund sizing from early April critical.</li>
</ul>


As of yesterday, combined AUM hit KRW 1tn, with KoAct alone near KRW 800bn, already rivaling top local equity active ETFs just three sessions post-listing.
KRX is already running tight liquidity checks with local ETF and broker desks, signaling massive passive flows and early, intense pre-positioning ahead of the June KOSDAQ 150 rebalance.
Non-KOSDAQ 150 names held by these ETFs, many KOSDAQ 150 inclusion candidates, could see amplified upside, making tracking active fund sizing from early April critical.


KOSDAQ Active ETFs’ Massive Retail Flows & June 150 Rebalance Angle

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>With 70% of the review period complete, there could be 14 constituent changes for the <a href="https://www.smartkarma.com/entities/kosdaq-150-index" target="_blank" data-smartkarma-citation="entities:31077:1" rel="noopener">KOSDAQ 150 Index (KOSDQ150 INDEX)</a> in June.</li>
<li>There has been huge interest in the KOSDAQ market lately and that has led to big ETF creations in the last few months. That leads to increased flow and impact.</li>
<li>The forecast adds have MASSIVELY outperformed the forecast deletes over the last few months and in the last week. While the flow/impact are huge, watch out for short-term reversal.</li>
</ul>


With 70% of the review period complete, there could be 14 constituent changes for the KOSDAQ 150 Index (KOSDQ150 INDEX) in June.
There has been huge interest in the KOSDAQ market lately and that has led to big ETF creations in the last few months. That leads to increased flow and impact.
The forecast adds have MASSIVELY outperformed the forecast deletes over the last few months and in the last week. While the flow/impact are huge, watch out for short-term reversal.


KOSDAQ150 Index Rebalance Preview: Soaring AUM and Increased Flow/Impact

<ul>
<li>Following the short sell ban announced on the weekend, 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</a> and <a href="https://www.smartkarma.com/entities/kosdaq-150-index" target="_blank" data-smartkarma-citation="entities:31077:1" rel="noopener">KOSDAQ 150</a> opened higher on Monday and rallied through the day.</li>
<li>A lot of the intraday gains on Monday have been given up over the next two trading days. Surprisingly, KRX data indicates that not a lot of shorts have covered.</li>
<li>Foreigners have been net cash buyers since Monday (could indicate covering of offshore borrow) while retail were big sellers on Monday.</li>
</ul>


Following the short sell ban announced on the weekend, the KOSPI 200 and KOSDAQ 150 opened higher on Monday and rallied through the day.
A lot of the intraday gains on Monday have been given up over the next two trading days. Surprisingly, KRX data indicates that not a lot of shorts have covered.
Foreigners have been net cash buyers since Monday (could indicate covering of offshore borrow) while retail were big sellers on Monday.


Korea Short Sell Ban: Not a Lot Covered on Monday; Shorts Holding On?

<ul>
<li>Fadu and Taihan failed KOSDAQ 150 qualitative screen likely due to extreme price move, despite no listing eligibility issues and only warning status.</li>
<li>Sungho and multiple names flagged, but only Fadu and Taihan were cut; likely driven by KRX discretion and ETF desk flow feedback.</li>
<li>Market did not price in Fadu and Taihan exclusion, so near term impact is material. KRX discretion looks inconsistent versus Sungho, likely driving flow distortion and higher volatility next week.</li>
</ul>


Fadu and Taihan failed KOSDAQ 150 qualitative screen likely due to extreme price move, despite no listing eligibility issues and only warning status.
Sungho and multiple names flagged, but only Fadu and Taihan were cut; likely driven by KRX discretion and ETF desk flow feedback.
Market did not price in Fadu and Taihan exclusion, so near term impact is material. KRX discretion looks inconsistent versus Sungho, likely driving flow distortion and higher volatility next week.


Why Fadu and Taihan Missed Out on KQ150 Inclusion

South Korea

Fadu Inc. oprates electronic component manufacturing businesses. The Company produces controller components, integrated circuits, and other products. Fadu conducts businesses in South Korea.

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Fadu (440110 KS)

What I've Found on Fadu and Simmtech: Key Near Term Passive Flow Plays

This post shares my latest findings on Fadu and Simmtech, two names drawing the most attention from a near term local passive flow perspective.

Sanghyun Park

KOSDAQ Active ETFs’ Massive Retail Flows & June 150 Rebalance Angle

This post covers how the massive retail flows into KOSDAQ active ETFs are shaping the dynamics of the KOSDAQ 150 rebalance.

Sanghyun Park

KOSDAQ150 Index Rebalance Preview: Soaring AUM and Increased Flow/Impact

There could be 14 constituent changes for the KOSDAQ150 in June. AUM linked to the index has soared over the last couple of months. The forecast...

Brian Freitas

Korea Short Sell Ban: Not a Lot Covered on Monday; Shorts Holding On?

Not a lot of shorts were covered on Monday. There could be more covering in the near term as the market drifts lower. KOSPI200 underperformed...

Brian Freitas

Why Fadu and Taihan Missed Out on KQ150 Inclusion

This post digs into the unclear outcome behind Fadu and Taihan getting excluded from the KOSDAQ 150 inclusion in the June rebalancing.

Sanghyun Park

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