Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Cross Asset Strategy

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<p>On 9 April, the <a href="https://www.reuters.com/article/southkorea-nps/update-1-s-koreas-pension-fund-adjusts-rules-to-raise-domestic-equity-allocation-idUSL1N2M20EN" target="_blank" rel="noopener">NPS</a> announced that it will change rules to increase the allocation of Korean stocks, which would be the first time in a decade. This adjustment could be implemented starting next week. This change comes after a lot of pressure by the retail investors.</p>
<p>NPS increased the strategic asset allocation (SAA) limit for domestic equities from the current 2% to 3%, increasing the percentage of Korean stocks it can hold from the current band of 14.8% -18.8% (+/- 2% with 16.8% as base) to 13.8% -19.8% (+/- 3% with 16.8% as base). NPS's target of the domestic equity allocation is 16.8% (of total fund amount). <strong>As a result of this change, the sale of domestic stocks by the NPS is expected to slow down.</strong></p>
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On 9 April, the NPS announced that it will change rules to increase the allocation of Korean stocks, which would be the first time in a decade. This adjustment could be implemented starting next week. This change comes after a lot of pressure by the retail investors.
NPS increased the strategic asset allocation (SAA) limit for domestic equities from the current 2% to 3%, increasing the percentage of Korean stocks it can hold from the current band of 14.8% -18.8% (+/- 2% with 16.8% as base) to 13.8% -19.8% (+/- 3% with 16.8% as base). NPS's target of the domestic equity allocation is 16.8% (of total fund amount). As a result of this change, the sale of domestic stocks by the NPS is expected to slow down.


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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Quantitative Analysis

<div><p>The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.</p></div><div><p>Hong Kong saw shorts rise on <a href="https://www.smartkarma.com/entities/ping-an-insurance-grp-co-of-china-ltd" target="_blank" data-smartkarma-citation="entities:12880:1" rel="noopener">Ping An Insurance (H) (2318 HK)</a>, <a href="https://www.smartkarma.com/entities/beijing-kuaishou-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:29725:1" rel="noopener">Kuaishou Technology (1024 HK)</a>, <a href="https://www.smartkarma.com/entities/byd-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20962:1" rel="noopener">BYD (1211 HK)</a>, <a href="https://www.smartkarma.com/entities/china-merchants-bank-co-ltd-3388a037-4214-4997-b45d-520518cfdb57" target="_blank" data-smartkarma-citation="entities:10987:1" rel="noopener">China Merchants Bank H (3968 HK)</a> and <a href="https://www.smartkarma.com/entities/lenovo-group-ltd" target="_blank" data-smartkarma-citation="entities:13359:1" rel="noopener">Lenovo (992 HK)</a> while there was short covering on <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a>, <a href="https://www.smartkarma.com/entities/netease" target="_blank" data-smartkarma-citation="entities:29030:1" rel="noopener">NetEase (9999 HK)</a>, <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a>, <a href="https://www.smartkarma.com/entities/aia-group-ltd" target="_blank" data-smartkarma-citation="entities:14895:1" rel="noopener">AIA Group Ltd (1299 HK)</a> and <a href="https://www.smartkarma.com/entities/galaxy-entertainment-group-limited" target="_blank" data-smartkarma-citation="entities:806:1" rel="noopener">Galaxy Entertainment Group (27 HK)</a>. Shorts increased on Financials, Information Technology and Real Estate, while decreasing on Communication Services, Consumer Discretionary and Health Care.</p></div><div><p>In Japan, stocks that saw the most shorts were <a href="https://www.smartkarma.com/entities/pan-pacific-international-holdings-corporation" target="_blank" data-smartkarma-citation="entities:13475:1" rel="noopener">Pan Pacific International Holdings (7532 JP)</a>, <a href="https://www.smartkarma.com/entities/sharp-corp" target="_blank" data-smartkarma-citation="entities:391:1" rel="noopener">Sharp Corp (6753 JP)</a>, <a href="https://www.smartkarma.com/entities/resona-holdings-inc" target="_blank" data-smartkarma-citation="entities:6841:1" rel="noopener">Resona Holdings (8308 JP)</a> and <a href="https://www.smartkarma.com/entities/toyo-tire-corporation" target="_blank" data-smartkarma-citation="entities:15064:1" rel="noopener">Toyo Tire Corporation (5105 JP)</a> while shorts decreased on <a href="https://www.smartkarma.com/entities/itochu-corp" target="_blank" data-smartkarma-citation="entities:18448:1" rel="noopener">Itochu Corp (8001 JP)</a>, <a href="https://www.smartkarma.com/entities/casio-computer-co-ltd" target="_blank" data-smartkarma-citation="entities:18338:1" rel="noopener">Casio Computer (6952 JP)</a>, <a href="https://www.smartkarma.com/entities/toshiba-corp" target="_blank" data-smartkarma-citation="entities:637:1" rel="noopener">Toshiba Corp (6502 JP)</a> and <a href="https://www.smartkarma.com/entities/monex-group-inc" target="_blank" data-smartkarma-citation="entities:14211:1" rel="noopener">Monex Group Inc (8698 JP)</a>. Sectorally, shorts increased marginally in Consumer Discretionary, Financials and Materials, and decreased in Industrials.</p></div><div><p>In Korea, short increased on <a href="https://www.smartkarma.com/entities/hyundai-motor-co" target="_blank" data-smartkarma-citation="entities:155:1" rel="noopener">Hyundai Motor Co (005380 KS)</a>, <a href="https://www.smartkarma.com/entities/celltrion-inc" target="_blank" data-smartkarma-citation="entities:991:1" rel="noopener">Celltrion Inc (068270 KS)</a> and <a href="https://www.smartkarma.com/entities/hanmi-pharm-co-ltd" target="_blank" data-smartkarma-citation="entities:12476:1" rel="noopener">Hanmi Pharm (128940 KS)</a> while shorts decreased on <a href="https://www.smartkarma.com/entities/samsung-electronics-co-ltd" target="_blank" data-smartkarma-citation="entities:191:1" rel="noopener">Samsung Electronics (005930 KS)</a>, <a href="https://www.smartkarma.com/entities/sk-hynix-inc" target="_blank" data-smartkarma-citation="entities:16955:1" rel="noopener">SK Hynix (000660 KS)</a>, <a href="https://www.smartkarma.com/entities/naver-corp" target="_blank" data-smartkarma-citation="entities:16029:1" rel="noopener">Naver Corp (035420 KS)</a> and <a href="https://www.smartkarma.com/entities/hana-tour-service-inc" target="_blank" data-smartkarma-citation="entities:4852:1" rel="noopener">Hana Tour Service (039130 KS)</a>. </p></div><div><p>Stocks in Taiwan that saw the highest increase in shorts were <a href="https://www.smartkarma.com/entities/pegatron-corp" target="_blank" data-smartkarma-citation="entities:12852:1" rel="noopener">Pegatron Corp (4938 TT)</a>, <a href="https://www.smartkarma.com/entities/yageo-corporation" target="_blank" data-smartkarma-citation="entities:13212:1" rel="noopener">Yageo Corporation (2327 TT)</a>, <a href="https://www.smartkarma.com/entities/largan-precision-co-ltd" target="_blank" data-smartkarma-citation="entities:9126:1" rel="noopener">Largan Precision (3008 TT)</a> and <a href="https://www.smartkarma.com/entities/united-microelectronics-corp" target="_blank" data-smartkarma-citation="entities:6450:1" rel="noopener">United Microelectronics Corp (2303 TT)</a> while shorts were covered on <a href="https://www.smartkarma.com/entities/unimicron-technology-corp" target="_blank" data-smartkarma-citation="entities:18778:1" rel="noopener">Unimicron Technology (3037 TT)</a>, <a href="https://www.smartkarma.com/entities/taiwan-semiconductor-manufacturing-company" target="_blank" data-smartkarma-citation="entities:11230:1" rel="noopener">TSMC (2330 TT)</a>, <a href="https://www.smartkarma.com/entities/alchip-technologies-ltd" target="_blank" data-smartkarma-citation="entities:20219:1" rel="noopener">Alchip Technologies (3661 TT)</a> and <a href="https://www.smartkarma.com/entities/winbond-electronics-corp" target="_blank" data-smartkarma-citation="entities:9177:1" rel="noopener">Winbond Electronics (2344 TT)</a>.</p></div>

The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.Hong Kong saw shorts rise on Ping An Insurance (H) (2318 HK), Kuaishou Technology (1024 HK), BYD (1211 HK), China Merchants Bank H (3968 HK) and Lenovo (992 HK) while there was short covering on Tencent Holdings (700 HK), NetEase (9999 HK), Meituan (3690 HK), AIA Group Ltd (1299 HK) and Galaxy Entertainment Group (27 HK). Shorts increased on Financials, Information Technology and Real Estate, while decreasing on Communication Services, Consumer Discretionary and Health Care.In Japan, stocks that saw the most shorts were Pan Pacific International Holdings (7532 JP), Sharp Corp (6753 JP), Resona Holdings (8308 JP) and Toyo Tire Corporation (5105 JP) while shorts decreased on Itochu Corp (8001 JP), Casio Computer (6952 JP), Toshiba Corp (6502 JP) and Monex Group Inc (8698 JP). Sectorally, shorts increased marginally in Consumer Discretionary, Financials and Materials, and decreased in Industrials.In Korea, short increased on Hyundai Motor Co (005380 KS), Celltrion Inc (068270 KS) and Hanmi Pharm (128940 KS) while shorts decreased on Samsung Electronics (005930 KS), SK Hynix (000660 KS), Naver Corp (035420 KS) and Hana Tour Service (039130 KS). Stocks in Taiwan that saw the highest increase in shorts were Pegatron Corp (4938 TT), Yageo Corporation (2327 TT), Largan Precision (3008 TT) and United Microelectronics Corp (2303 TT) while shorts were covered on Unimicron Technology (3037 TT), TSMC (2330 TT), Alchip Technologies (3661 TT) and Winbond Electronics (2344 TT).

Asia Short Interest: Kuaishou, BYD, Galaxy, Sharp, Resona, Toshiba, Celltrion, Naver, Pegatron, TSMC

<div class="content-highlight"><p><a href="https://www.news1.kr/articles/?4201835" target="_blank" rel="noopener">Korea Financial Services Commission (FSC)</a> announced after the market close today that there will be a PARTIAL end of the ban on short selling of stocks starting on May 3rd. This will not be applied on the entire market. Rather, this <strong>partial end of the ban on short selling of stocks will only apply for KOSPI 200 and KOSDAQ 150 included stocks</strong> (350 stocks in total) and <strong>will not apply</strong> for the remaining 2,037 stocks in the Korean stock market.</p></div>

Korea Financial Services Commission (FSC) announced after the market close today that there will be a PARTIAL end of the ban on short selling of stocks starting on May 3rd. This will not be applied on the entire market. Rather, this partial end of the ban on short selling of stocks will only apply for KOSPI 200 and KOSDAQ 150 included stocks (350 stocks in total) and will not apply for the remaining 2,037 stocks in the Korean stock market.

PARTIAL END of Ban on Short Selling of Stocks in Korea

<ul>
<li><strong>The South Korean Justice Minister Cho Kuk resigned today. Cho Kuk has been the most contentious political figure in South Korea this year. </strong></li>
<li><strong>In this report, we discuss the main political and economic implications of Cho Kuk stepping away from the Justice Minister position after being appointed as the head of the Ministry of Justice on September 9th, 2019. </strong></li>
<li><strong>The fight over Cho Kuk has symbolized the great divide between the conservative right and the socialist left in Korea. </strong></li>
</ul>


The South Korean Justice Minister Cho Kuk resigned today. Cho Kuk has been the most contentious political figure in South Korea this year. 
In this report, we discuss the main political and economic implications of Cho Kuk stepping away from the Justice Minister position after being appointed as the head of the Ministry of Justice on September 9th, 2019. 
The fight over Cho Kuk has symbolized the great divide between the conservative right and the socialist left in Korea. 


Justice Minister Cho Kuk Resigns. What's Next?

Thematic (Sector/Industry)

<p><strong>In this report, we provide South Korea's response to Japan's economic sanctions as well as </strong><strong>an analysis of the recent visitors trend to South Korea and Japan. </strong>Plus, we analyze the likely probabilities of Abe and the Japanese government enforcing another round of economic sanctions on South Korea including visa restrictions to Japan. </p><p>In our view, the first round of economic sanctions by Japan on South Korea may not be enough for President Moon Jae-In to change his mind. The higher probability event is that South Korea just waits and makes no major moves until Japan makes a few more economic sanctions on South Korea before the South Korean government is forced to give in. </p><p>Right now, one of the growing probability is that Abe's Japanese government enforces another round of economic sanctions on South Korea including <a href="https://www.scmp.com/news/asia/east-asia/article/3001530/travel-firms-fear-japan-will-stop-visas-south-koreans-row-over" target="_blank" rel="noopener">restrictions on visas</a> of South Koreans to Japan in the coming weeks. We provide a list of stocks that will be negatively impacted by a potential visa restrictions of South Koreans to Japan.</p>

In this report, we provide South Korea's response to Japan's economic sanctions as well as an analysis of the recent visitors trend to South Korea and Japan. Plus, we analyze the likely probabilities of Abe and the Japanese government enforcing another round of economic sanctions on South Korea including visa restrictions to Japan. In our view, the first round of economic sanctions by Japan on South Korea may not be enough for President Moon Jae-In to change his mind. The higher probability event is that South Korea just waits and makes no major moves until Japan makes a few more economic sanctions on South Korea before the South Korean government is forced to give in. Right now, one of the growing probability is that Abe's Japanese government enforces another round of economic sanctions on South Korea including restrictions on visas of South Koreans to Japan in the coming weeks. We provide a list of stocks that will be negatively impacted by a potential visa restrictions of South Koreans to Japan.

South Korea's Response to Japan's Sanctions and Recent Visitors Trend to Japan & South Korea

South Korea

Hana Tour Service Inc. wholesales a variety of travel related services.  The Company provides outbound, inbound and domestic travel packages and cooperates with credit card companies and Internet shopping malls to market its services. Hana Tour Service also works as general sales agency (GSA) of overseas cruise and rail passes.

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Hana Tour Service (039130 KS)

NPS Raises Domestic Equity Allocations

NPS increased the strategic asset allocation (SAA) limit for domestic equities from the current 2% to 3%. As a result of this change, the sale of...

Douglas Kim

Asia Short Interest: Kuaishou, BYD, Galaxy, Sharp, Resona, Toshiba, Celltrion, Naver, Pegatron, TSMC

The Insight looks at large short interest movements across HK, Japan, Korea and Taiwan stocks and highlights large increases/decreases in shorts to...

Brian Freitas

PARTIAL END of Ban on Short Selling of Stocks in Korea

Korea Financial Services Commission (FSC) announced after the market close today that there will be a PARTIAL end of the ban on short selling of...

Douglas Kim

Justice Minister Cho Kuk Resigns. What's Next?

The South Korean Justice Minister Cho Kuk resigned today. Cho Kuk has been the most contentious political figure in South Korea this year. In...

Douglas Kim

South Korea's Response to Japan's Sanctions and Recent Visitors Trend to Japan & South Korea

In this report, we provide South Korea's response to Japan's economic sanctions as well as an analysis of the recent visitors trend to South Korea...

Douglas Kim

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