Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Cross Asset Strategy

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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.
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.
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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.


The Korea Exchange announced its KOSDAQ150 and KRX300 indices rebalances today. There were 17 new additions and 17 deletions for KOSDAQ150. Most of the stocks that were expected to be included in KOSDAQ 150 were officially included in the rebalance. However there were a few surprises. For example <a href="https://www.smartkarma.com/entities/nanos-co-ltd" target="_blank" data-smartkarma-citation="entities:16796:1" rel="noopener">Nanos Co Ltd (151910 KS),</a>which was one of the stocks that was expected to be included in KOSDAQ150, did not get included in this indext this time. On the other hand, the following stocks including <a href="https://www.smartkarma.com/entities/sang-a-frontec-co-ltd" target="_blank" data-smartkarma-citation="entities:20692:1" rel="noopener">Sang A Frontec (089980 KS)</a>, Novarex (194700 KS(, CIS (222080 KS), MedPacto (215980 KS), <a href="https://www.smartkarma.com/entities/koreacenter-com-co-ltd" target="_blank" data-smartkarma-citation="entities:28329:1" rel="noopener">Koreacenter.com Co Ltd (290510 KS)</a>, and Soulbrain (357780 KS) which were not on the top of the lists of getting selected into the KOSDAQ150 index by the locals, were formally selected be part of the new KOSDAQ150 inclusions.  The Korea Exchange also made changes to the KRX300 index. Although the KRX300 index is not currently as important as KOSPI200 and KOSDAQ150 indices, it is increasingly gaining in importance among the local institutional investors. The KRX300 had 33 new additions and 35 deletions.

The Korea Exchange announced its KOSDAQ150 and KRX300 indices rebalances today. There were 17 new additions and 17 deletions for KOSDAQ150. Most of the stocks that were expected to be included in KOSDAQ 150 were officially included in the rebalance. However there were a few surprises. For example Nanos Co Ltd (151910 KS),which was one of the stocks that was expected to be included in KOSDAQ150, did not get included in this indext this time. On the other hand, the following stocks including Sang A Frontec (089980 KS), Novarex (194700 KS(, CIS (222080 KS), MedPacto (215980 KS), Koreacenter.com Co Ltd (290510 KS), and Soulbrain (357780 KS) which were not on the top of the lists of getting selected into the KOSDAQ150 index by the locals, were formally selected be part of the new KOSDAQ150 inclusions.  The Korea Exchange also made changes to the KRX300 index. Although the KRX300 index is not currently as important as KOSPI200 and KOSDAQ150 indices, it is increasingly gaining in importance among the local institutional investors. The KRX300 had 33 new additions and 35 deletions. 

KOSDAQ150 and KRX300 Indices Rebalances (Overlapping Additions & Deletions)

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<li>The South Korean Justice Minister Cho Kuk resigned today. Cho Kuk has been the most contentious political figure in South Korea this year. </li>
<li>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. </li>
<li>The fight over Cho Kuk has symbolized the great divide between the conservative right and the socialist left in Korea. </li>
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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)

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It has been more than two months since the political conflict between Japan and South Korea has erupted. In this report, we provide an update on the Korean people's boycott of Japanese products and travel to Japan. We have tried to summarize the most recent, publicly available information in this report. 
There are four major sectors that are negatively impacted by this boycott, including a) autos, b) apparel, c) food &amp; beverage, and d) air travel sectors. We have mentioned some of these Japanese companies that are impacted by this conflict in our report, <a href="https://www.smartkarma.com/insights/south-korea-excludes-japan-from-its-whitelist-a-list-of-25-japanese-stocks-impacted-by-conflict" target="_blank" data-smartkarma-citation="insights:31680" rel="noopener">South Korea Excludes Japan from Its Whitelist &amp; A List of 25 Japanese Stocks Impacted by Conflict</a>. 
For now, we continue to believe that this ongoing political conflict between Japan and South Korea will not be settled quickly but rather be prolonged, most likely into the spring of 2020. 
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It has been more than two months since the political conflict between Japan and South Korea has erupted. In this report, we provide an update on the Korean people's boycott of Japanese products and travel to Japan. We have tried to summarize the most recent, publicly available information in this report. 
There are four major sectors that are negatively impacted by this boycott, including a) autos, b) apparel, c) food &amp; beverage, and d) air travel sectors. We have mentioned some of these Japanese companies that are impacted by this conflict in our report, South Korea Excludes Japan from Its Whitelist &amp; A List of 25 Japanese Stocks Impacted by Conflict. 
For now, we continue to believe that this ongoing political conflict between Japan and South Korea will not be settled quickly but rather be prolonged, most likely into the spring of 2020. 


An Update on Korean Consumers' Boycott of Japanese Products and Travel to Japan

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 <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.

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

Jeju Air Co., Ltd. operates as an airline carrier in the aviation industry.   The Company provides air transportation services for passengers, baggage, and cargo within South Korea, Japan, and Southeastern Asian countries.

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Jeju Air (089590 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

KOSDAQ150 and KRX300 Indices Rebalances (Overlapping Additions & Deletions)

We highlight the KOSDAQ150 and KRX300 indices rebalances. There are some interesting new names, especially among those that are over lapping in...

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

An Update on Korean Consumers' Boycott of Japanese Products and Travel to Japan

It has been more than two months since the political conflict between Japan and South Korea has erupted. In this report, we provide an update on...

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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