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.

Event-Driven

<ul>
<li>The index targets the GICS Financials/Banks sector stocks: 12 stocks belong to this sector. Then nine of these are currently included in the KRX Banks.</li>
<li>Compared to the last rebalancing, where we had Kakao Bank's inclusion event, the impact size for the upcoming rebalancing will likely be significantly reduced.</li>
<li>The last rebalancing showed that the directional correlation between passive flow and price movement was high. So, we can still consider a Long/Short Day Trade even with this impact size.</li>
</ul>


The index targets the GICS Financials/Banks sector stocks: 12 stocks belong to this sector. Then nine of these are currently included in the KRX Banks.
Compared to the last rebalancing, where we had Kakao Bank's inclusion event, the impact size for the upcoming rebalancing will likely be significantly reduced.
The last rebalancing showed that the directional correlation between passive flow and price movement was high. So, we can still consider a Long/Short Day Trade even with this impact size.


KRX Banks Index (KODEX ETF): September Rebalancing Preview

<ul>
<li>Trading for price gain by building a position 2-3 weeks before the dividend record date and selling it before the ex-dividend date provides better performance than directly aiming at dividends.</li>
<li>There are signs that this pattern will repeat itself this year. Already, local financial stocks have outperformed the market this month.</li>
<li>Even from now, we can consider building an outright long position on these dividend stocks in a basket and getting out before (or at) the dividend record date.</li>
</ul>


Trading for price gain by building a position 2-3 weeks before the dividend record date and selling it before the ex-dividend date provides better performance than directly aiming at dividends.
There are signs that this pattern will repeat itself this year. Already, local financial stocks have outperformed the market this month.
Even from now, we can consider building an outright long position on these dividend stocks in a basket and getting out before (or at) the dividend record date.


Korea Dividend Stocks: Yearend Trading Approach

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Quantitative Analysis

In this insight, we provide a list of 20 stocks in KOSPI with at least 4% dividend yield and more than $500 million in market cap. These 20 stocks are down on average 0.4% in the past month, outperforming KOSPI which is down 3.4% in the same period. Clearly, it appears that many investors have been starting to allocate more capital to the higher dividend paying stocks in the past several weeks.Among these 20 stocks, we believe that five stocks in particular, are interesting which are the ones with the highest share price performance in the past one month combined with at least 4% dividend yield. These five stocks are as follows:<ul>
<li>Industrial Bank of Korea (024110 KS)</li>
<li>
<a href="https://www.smartkarma.com/entities/korean-reinsurance-co" target="_blank" data-smartkarma-citation="entities:3436:1" rel="noopener">Korean Reinsurance Co (003690 KS)</a> </li>
<li>
<a href="https://www.smartkarma.com/entities/jb-financial-group-co-ltd" target="_blank" data-smartkarma-citation="entities:16104:1" rel="noopener">Jb Financial Group (175330 KS)</a> </li>
<li>
<a href="https://www.smartkarma.com/entities/kyobo-securities-co-ltd" target="_blank" data-smartkarma-citation="entities:3224:1" rel="noopener">Kyobo Securities (030610 KS)</a> </li>
<li>
<a href="https://www.smartkarma.com/entities/samsung-card-co-ltd" target="_blank" data-smartkarma-citation="entities:573:1" rel="noopener">Samsung Card Co (029780 KS)</a> </li>
</ul>These five stocks have an average dividend yield of 4.6% and their share prices are up on average 8.1% in the past one month, vastly outperforming KOSPI which is down 0.3% in the same period.

In this insight, we provide a list of 20 stocks in KOSPI with at least 4% dividend yield and more than $500 million in market cap. These 20 stocks are down on average 0.4% in the past month, outperforming KOSPI which is down 3.4% in the same period. Clearly, it appears that many investors have been starting to allocate more capital to the higher dividend paying stocks in the past several weeks.Among these 20 stocks, we believe that five stocks in particular, are interesting which are the ones with the highest share price performance in the past one month combined with at least 4% dividend yield. These five stocks are as follows:
Industrial Bank of Korea (024110 KS)

Korean Reinsurance Co (003690 KS) 

Jb Financial Group (175330 KS) 

Kyobo Securities (030610 KS) 

Samsung Card Co (029780 KS) 
These five stocks have an average dividend yield of 4.6% and their share prices are up on average 8.1% in the past one month, vastly outperforming KOSPI which is down 0.3% in the same period.

High Dividend Yielding Stocks With Momentum in Korea Outperforming KOSPI

Korea's financial regulators, the Financial Services Commission, had advised the local banks and bank holding companies to keep a dividend payout ratio below 20%. The purpose was clear. It was to secure a sufficient capital buffer to absorb potential losses resulting from COVID-19.This recommendation for the 20% cap is effective until the end of this month.The market widely expects the FSC to not renew this 20% dividend cap after this month amid the fast-rebounding economy.

Korea's financial regulators, the Financial Services Commission, had advised the local banks and bank holding companies to keep a dividend payout ratio below 20%. The purpose was clear. It was to secure a sufficient capital buffer to absorb potential losses resulting from COVID-19.This recommendation for the 20% cap is effective until the end of this month.The market widely expects the FSC to not renew this 20% dividend cap after this month amid the fast-rebounding economy.

Korea Banks 20% Dividend Cap Scrapping: Projected Div Payout & Yield of 8 Bank Stocks

Global Bank Equity Specialist, Creative Portfolios

Paul Hollingworth

Global Bank Equity Specialist

Creative Portfolios

Equity Bottom-Up

This year, we have written about KB Financial and Hana Financial in South Korea. Today is the turn of a smaller lender, the underrated JB Financial Group.<a href="https://www.smartkarma.com/entities/jb-financial-group-co-ltd" target="_blank" data-smartkarma-citation="entities:16104:1" rel="noopener">Jb Financial Group (175330 KS</a> is primarily a SME lender (44% of portfolio). Mortgages make up 23% of loans and other retail (including personal credit and auto financing, especially used cars) account for 27%. JB Financial Group incorporates Jeonbuk Bank (JB), Kwangju Bank (KB), JB Woori Capital (JBWC), Phnom Penh Commercial Bank, and JB Asset Management.JB Financial Group results at Q320 were generally highly constructive. Our PH Score™ shows that the bank is making headway on Profitability, on Efficiency, on Liquidity (LDR) and on headline Asset Quality. Capital Adequacy, as with Provisioning, reveals a mixed picture with Equity/Assets showing some erosion while CET1, Tier1, and TCR all moving higher. While the top-line shows a flat Net Interest Income, supported by much lower Interest Costs, non-interest Income (fees &amp; commissions, securities, leases, cards) was vibrant. Expansion of Comprehensive Income and Net Profit was solid, if not unspectacular, though given the context was not at all discouraging. In general, we have a broadly positive picture though we are mindful of some Balance Sheet risks relating to a still high Debt/Equity and a relatively shallow Liquid Asset ratio.<div class="content-highlight">A FV of 3%, a PBV of 0.32x, an Earnings Yield of 29.5%, and a Dividend Yield of 5.4% are certainly not unappealing. The bank comfortably passes our theoretical threshold of a FV of 10% and a PBV of &lt;1x. A PH Score™ of 9.1 is in the top decile globally. According to our VFM system (Valuation, Fundamentals, Momentum), JB Financial resides in the top decile of our global universe along with one of our favoured lenders, KB Financial.</div>

This year, we have written about KB Financial and Hana Financial in South Korea. Today is the turn of a smaller lender, the underrated JB Financial Group.Jb Financial Group (175330 KS is primarily a SME lender (44% of portfolio). Mortgages make up 23% of loans and other retail (including personal credit and auto financing, especially used cars) account for 27%. JB Financial Group incorporates Jeonbuk Bank (JB), Kwangju Bank (KB), JB Woori Capital (JBWC), Phnom Penh Commercial Bank, and JB Asset Management.JB Financial Group results at Q320 were generally highly constructive. Our PH Score™ shows that the bank is making headway on Profitability, on Efficiency, on Liquidity (LDR) and on headline Asset Quality. Capital Adequacy, as with Provisioning, reveals a mixed picture with Equity/Assets showing some erosion while CET1, Tier1, and TCR all moving higher. While the top-line shows a flat Net Interest Income, supported by much lower Interest Costs, non-interest Income (fees &amp; commissions, securities, leases, cards) was vibrant. Expansion of Comprehensive Income and Net Profit was solid, if not unspectacular, though given the context was not at all discouraging. In general, we have a broadly positive picture though we are mindful of some Balance Sheet risks relating to a still high Debt/Equity and a relatively shallow Liquid Asset ratio.A FV of 3%, a PBV of 0.32x, an Earnings Yield of 29.5%, and a Dividend Yield of 5.4% are certainly not unappealing. The bank comfortably passes our theoretical threshold of a FV of 10% and a PBV of &lt;1x. A PH Score™ of 9.1 is in the top decile globally. According to our VFM system (Valuation, Fundamentals, Momentum), JB Financial resides in the top decile of our global universe along with one of our favoured lenders, KB Financial.

South Korea

JB Financial Group Co. Ltd., a holding company, provides a full range of consumer and commercial banking-related financial services.

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Jb Financial Group (175330 KS)

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High Dividend Yielding Stocks With Momentum in Korea Outperforming KOSPI

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Korea Banks 20% Dividend Cap Scrapping: Projected Div Payout & Yield of 8 Bank Stocks

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JB Financial: Underrated

JB Financial Group shows strong fundamental momentum at a cheap price. We like SK lenders and JB is slightly "off radar" despite having some...

Paul Hollingworth

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