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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Index Rebalance

The review period for the <a href="https://www.smartkarma.com/entities/korea-stock-exchange-kospi-200-index" target="_blank" data-smartkarma-citation="entities:26021:1" rel="noopener">Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX)</a> June review ends on 30 April. The Korea Exchange (KRX) will announce the results of the June 2021 review of the <a href="https://www.smartkarma.com/entities/korea-stock-exchange-kospi-200-index" target="_blank" data-smartkarma-citation="entities:26021:1" rel="noopener">Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX)</a> in May with the changes becoming effective after the close of trading on 10 June.There are currently 201 index constituents following the spin off of <a href="https://www.smartkarma.com/entities/daelim-industrial-co-ltd" target="_blank" data-smartkarma-citation="entities:18095:1" rel="noopener">DL Co Ltd (000210 KS)</a> and the inclusion of <a href="https://www.smartkarma.com/entities/dl-e-c-co-ltd" target="_blank" data-smartkarma-citation="entities:31375:1" rel="noopener">DL E&amp;C Co Ltd (375500 KS)</a> in the index. There will be 202 index constituents following the spin off of <a href="https://www.smartkarma.com/entities/lg-corp" target="_blank" data-smartkarma-citation="entities:6653:1" rel="noopener">LG Corp (003550 KS)</a> and the inclusion of LX Holdings in the index.We currently see 3 inclusions and 5 exclusions from the index. The potential inclusions are <a href="https://www.smartkarma.com/entities/hyosung-tnc-co-ltd" target="_blank" data-smartkarma-citation="entities:27749:1" rel="noopener">Hyosung TNC Co Ltd (298020 KS)</a>, <a href="https://www.smartkarma.com/entities/hyosung-advanced-materials-corporation" target="_blank" data-smartkarma-citation="entities:27751:1" rel="noopener">Hyosung Advanced Materials (298050 KS)</a> and <a href="https://www.smartkarma.com/entities/dongwon-industries-co-ltd" target="_blank" data-smartkarma-citation="entities:1783:1" rel="noopener">Dongwon Industries (006040 KS)</a>, while the potential deletions are <a href="https://www.smartkarma.com/entities/taeyoung-engineering-construction-co-ltd" target="_blank" data-smartkarma-citation="entities:18740:1" rel="noopener">Taeyoung Engineering &amp; Construction (009410 KS)</a>, <a href="https://www.smartkarma.com/entities/namsun-aluminum-co-ltd" target="_blank" data-smartkarma-citation="entities:17514:1" rel="noopener">Namsun Aluminum (008350 KS)</a>, <a href="https://www.smartkarma.com/entities/binggrae-co-ltd" target="_blank" data-smartkarma-citation="entities:16424:1" rel="noopener">Binggrae Co Ltd (005180 KS)</a>, <a href="https://www.smartkarma.com/entities/hanil-hyundai-cement-co-ltd" target="_blank" data-smartkarma-citation="entities:14406:1" rel="noopener">Hanil Hyundai Cement (006390 KS)</a> and <a href="https://www.smartkarma.com/entities/samyang-corp" target="_blank" data-smartkarma-citation="entities:16321:1" rel="noopener">Samyang Corp (145990 KS)</a>. The expected Fast Entry of <a href="https://www.smartkarma.com/entities/sk-bioscience-co-ltd" target="_blank" data-smartkarma-citation="entities:31484:1" rel="noopener">SK Bioscience (302440 KS)</a> could result in <a href="https://www.smartkarma.com/entities/spc-samlip" target="_blank" data-smartkarma-citation="entities:6007:1" rel="noopener">SPC Samlip (005610 KS)</a> being deleted from the index.The potential Fast Entry of <a href="https://www.smartkarma.com/entities/sk-ie-technology" target="_blank" data-smartkarma-citation="entities:29207:1" rel="noopener">SK IE Technology (SKIET KS)</a> could result in <a href="https://www.smartkarma.com/entities/aekyung-industrial-co-ltd" target="_blank" data-smartkarma-citation="entities:27129:1" rel="noopener">Aekyung Industrial Co Ltd (018250 KS)</a> being deleted from the index.<a href="https://www.smartkarma.com/entities/taihan-electric-wire-co-ltd" target="_blank" data-smartkarma-citation="entities:11551:1" rel="noopener">Taihan Electric Wire (001440 KS)</a> is a very close add - the next 5 trading days will decide if the stock is added to the index or not.Short selling in Korea is scheduled to resume on 3 May and there could be a fair amount of movement in the stocks ahead of the index review announcement and implementation date.

The review period for the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) June review ends on 30 April. The Korea Exchange (KRX) will announce the results of the June 2021 review of the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) in May with the changes becoming effective after the close of trading on 10 June.There are currently 201 index constituents following the spin off of DL Co Ltd (000210 KS) and the inclusion of DL E&amp;C Co Ltd (375500 KS) in the index. There will be 202 index constituents following the spin off of LG Corp (003550 KS) and the inclusion of LX Holdings in the index.We currently see 3 inclusions and 5 exclusions from the index. The potential inclusions are Hyosung TNC Co Ltd (298020 KS), Hyosung Advanced Materials (298050 KS) and Dongwon Industries (006040 KS), while the potential deletions are Taeyoung Engineering &amp; Construction (009410 KS), Namsun Aluminum (008350 KS), Binggrae Co Ltd (005180 KS), Hanil Hyundai Cement (006390 KS) and Samyang Corp (145990 KS). The expected Fast Entry of SK Bioscience (302440 KS) could result in SPC Samlip (005610 KS) being deleted from the index.The potential Fast Entry of SK IE Technology (SKIET KS) could result in Aekyung Industrial Co Ltd (018250 KS) being deleted from the index.Taihan Electric Wire (001440 KS) is a very close add - the next 5 trading days will decide if the stock is added to the index or not.Short selling in Korea is scheduled to resume on 3 May and there could be a fair amount of movement in the stocks ahead of the index review announcement and implementation date.

KOSPI200 Index Rebalance Preview: Review Period Almost Complete; Short Selling Commences in a Week

Silver Point

Thomas J. Monaco

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Equity Bottom-Up

*Ssangyong Declares Bankruptcy: Purchased by Mahindra &amp; Mahindra (MM.IN) [M&amp;M] in 2011, the 74.7%-owned SsangYong Motor Company (003620.KS) [Ssangyong] in South Korea filed an application for commencement of the rehabilitation procedure with the Seoul Bankruptcy Court; and*M&amp;M Guarantee: Unfortunately for M&amp;M, it has provided a corporate guarantee on behalf of Ssangyong on loans up to IN 6.8bn. If no new investor steps in, M&amp;M will be required to pay the guarantee.

*Ssangyong Declares Bankruptcy: Purchased by Mahindra &amp; Mahindra (MM.IN) [M&amp;M] in 2011, the 74.7%-owned SsangYong Motor Company (003620.KS) [Ssangyong] in South Korea filed an application for commencement of the rehabilitation procedure with the Seoul Bankruptcy Court; and*M&amp;M Guarantee: Unfortunately for M&amp;M, it has provided a corporate guarantee on behalf of Ssangyong on loans up to IN 6.8bn. If no new investor steps in, M&amp;M will be required to pay the guarantee.

Mahindra & Mahindra – Ssanyong Goes Plotz

Managing Director

Elan Gore

TMI Data Science

TMI Data Science utilizes Natural Language Processing to build custom leading indicators using unstructured data sourced from the global financial, trade & traditional media.  Our proprietary software, TMI Machine, is a text-mining platform designed with the buy-side & capital markets professional in mind, text-mining the global media to discern and quantify nuanced qualitative shifts in press coverage as they apply to macroeconomics, equity indexes/ETFs, commodities, currencies, fixed income & individual equities.  TMI provides custom leading indicators and systematic trading strategies, operating at the nexus of linguistics & statistics drawing on vast experience in investment banking and hedge fund settings in senior quantitative and fundamental roles.  

TMI Data Science was founded by Elan Gore, an award-winning Senior Global Basic Materials Equity Analyst & China Economist with 15 years of experience in North American hedge funds & institutional managers; and Alessandro Porrino, Ph.D., an Algorithmic Trading Analyst and Programmer with 10 years of front-office experience ranging from complex FX option pricing to auto-hedging strategies at Bank of America Merrill Lynch and Standard Chartered.  Mr. Gore holds an MBA in Finance from New York University Stern School of Business, and Mr. Porrino holds a Ph.D. in Systems Engineering from Brunel University London.

Cross Asset Strategy

<ul>
<li>While short-term data has been out of favour as the market envisions a post-vaccine supercycle, our text-mining detects greater relative concern on Korean in the financial media over KRW strength and COVID case counts in recent weeks</li>
<li>Japan, for example, saw similar concerns emerge on surging case counts, but news sentiment has been supported by the recent 40tr JPY stimulus package vs. limited Korean measures</li>
<li>KRW/USD's +10% move is equivalent +2x STDEVs, similar to the magnitude of CNY appreciation in the same period, vs. low single-digit moves in JPY and TWD</li>
<li>Consensus suggests foreign inflows associated with a strong KRW are likely to push the KOSPI higher even if exporter earnings (and exports) are hampered by the currency</li>
<li>While we acknowledge the macro impact of COVID resurgence is merely transitory, a key driver in our recent news attribution is the sharp decline in Korean credit card spending as reported by Shinhan for the second half of November</li>
<li>Less transitory is the KRW, and 801 Korean exporters recent polled by the Korea International Trade Association (KITA) suggested the currency is already beyond their pain threshold</li>
</ul><div class="content-highlight">TMI Data Science utilizes Natural Language Processing to build custom leading indicators using unstructured data sourced from the global financial, trade &amp; traditional media. Our proprietary software text-mines the global media to discern and quantify nuanced qualitative shifts in press coverage as they apply to macroeconomics, equity indexes/ETFs, commodities, currencies, fixed income &amp; individual equities. </div>


While short-term data has been out of favour as the market envisions a post-vaccine supercycle, our text-mining detects greater relative concern on Korean in the financial media over KRW strength and COVID case counts in recent weeks
Japan, for example, saw similar concerns emerge on surging case counts, but news sentiment has been supported by the recent 40tr JPY stimulus package vs. limited Korean measures
KRW/USD's +10% move is equivalent +2x STDEVs, similar to the magnitude of CNY appreciation in the same period, vs. low single-digit moves in JPY and TWD
Consensus suggests foreign inflows associated with a strong KRW are likely to push the KOSPI higher even if exporter earnings (and exports) are hampered by the currency
While we acknowledge the macro impact of COVID resurgence is merely transitory, a key driver in our recent news attribution is the sharp decline in Korean credit card spending as reported by Shinhan for the second half of November
Less transitory is the KRW, and 801 Korean exporters recent polled by the Korea International Trade Association (KITA) suggested the currency is already beyond their pain threshold
TMI Data Science utilizes Natural Language Processing to build custom leading indicators using unstructured data sourced from the global financial, trade &amp; traditional media. Our proprietary software text-mines the global media to discern and quantify nuanced qualitative shifts in press coverage as they apply to macroeconomics, equity indexes/ETFs, commodities, currencies, fixed income &amp; individual equities. 

TMI Snapshot:  Text-Mining Detects Potential Pullback in Korea Sentiment on KRW Rally & COVID Surge

Deputy Chief Economist

Sharmila Whelan

Independent and original Asian investment research

Aletheia Capital

Aletheia Capital (HK) Ltd. (previously known as Asianomics) combines the extensive knowledge of its experienced team with technology and regulatory changes to disrupt Global Markets business in Asia. The firm is completely independent with no conflicts of interest either on Investment Banking advisory or Capital Markets execution.

Macroeconomics

Korea may have returned to growth in the third quarter but the economy is not out of the woods. Job losses are mounting, real interest rates are rising while companies remain cautious about capex and the outlook for corporate profits. The upshot is that domestic demand is weakening. We do not rule out a further expansion in fiscal spending to support the economy.

Korea may have returned to growth in the third quarter but the economy is not out of the woods. Job losses are mounting, real interest rates are rising while companies remain cautious about capex and the outlook for corporate profits. The upshot is that domestic demand is weakening. We do not rule out a further expansion in fiscal spending to support the economy.

<ul>
<li>Last month our leading indicators saw relative strength in Korea despite a spike in COVID-19 cases and concerns on restrictive measures intended to cool off the housing market; these negatives were more than offset by strong sentiment on domestic corporates (see <a href="https://www.smartkarma.com/insights/tmi-indicators-korea-relative-strength-in-the-face-of-second-covid-19-wave-overheated-housing" target="_blank" data-smartkarma-citation="insights:42874" rel="noopener">TMI Indicators:  Korea Relative Strength In The Face Of Second COVID-19 Wave, Overheated Housing</a>)</li>
<li>While macro sentiment deteriorated through most of September across Asia (and globally), we see a new Korea-specific lift in sentiment on strong September exports and persistent strength in housing despite cooling measures</li>
<li>COVID-19 new case data has slowed down notably in recent weeks, with impact evident in mobility in other alt-data points</li>
<li>Korea now screens ahead of most Asian markets (and EM in general) across our universe of country indicators</li>
</ul><div class="content-highlight">TMI Data Science utilizes Natural Language Processing to build custom leading indicators using unstructured data sourced from the global financial, trade &amp; traditional media. Our proprietary software text-mines the global media to discern and quantify nuanced qualitative shifts in press coverage as they apply to macroeconomics, equity indexes/ETFs, commodities, currencies, fixed income &amp; individual equities. </div>


Last month our leading indicators saw relative strength in Korea despite a spike in COVID-19 cases and concerns on restrictive measures intended to cool off the housing market; these negatives were more than offset by strong sentiment on domestic corporates (see TMI Indicators:  Korea Relative Strength In The Face Of Second COVID-19 Wave, Overheated Housing)
While macro sentiment deteriorated through most of September across Asia (and globally), we see a new Korea-specific lift in sentiment on strong September exports and persistent strength in housing despite cooling measures
COVID-19 new case data has slowed down notably in recent weeks, with impact evident in mobility in other alt-data points
Korea now screens ahead of most Asian markets (and EM in general) across our universe of country indicators
TMI Data Science utilizes Natural Language Processing to build custom leading indicators using unstructured data sourced from the global financial, trade &amp; traditional media. Our proprietary software text-mines the global media to discern and quantify nuanced qualitative shifts in press coverage as they apply to macroeconomics, equity indexes/ETFs, commodities, currencies, fixed income &amp; individual equities. 

TMI Indicators:  Korea Relative Strength Continues, Exports Lift Sentiment & Housing Still Robust

South Korea

iShares MSCI South Korea ETF is an exchange traded fund incorporated in the USA. The ETF tracks the performance of the MSCI Korea 25-50 USD Index. The fund holds companies of all market caps which are primarily traded on the Korean exchange. The ETF's holdings are primarily focused in the consumer discretionary, financial and information technology sectors.

iShares MSCI South Korea ETF (EWY US)

KOSPI200 Index Rebalance Preview: Review Period Almost Complete; Short Selling Commences in a Week

There could be up to 6 inclusions and 8 exclusions at the KOSPI200 index review in June. The inclusions could outperform the exclusions as short...

Brian Freitas

Mahindra & Mahindra – Ssanyong Goes Plotz

MAHINDRA & MAHINDRA: 75% Owned Ssangyong Motors Declares Bankruptcy, and M&M Is Likely On The Hook For The Credit Guarantees.

Thomas J. Monaco

TMI Snapshot: Text-Mining Detects Potential Pullback in Korea Sentiment on KRW Rally & COVID Surge

Our text-mining detects a potential pullback in Korea macro sentiment on rapid KRW appreciation and the COVID surge impacting credit card spending,...

Elan Gore

Korea - Not Out Of The Woods

Korea may have returned to growth in the third quarter but the economy is not out of the woods. Job losses are mounting while companies remain...

Sharmila Whelan

TMI Indicators: Korea Relative Strength Continues, Exports Lift Sentiment & Housing Still Robust

Last month our leading indicators saw relative strength in Korea

Elan Gore