Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Event-Driven

<ul>
<li>After the market close, it was announced that HYBE (352820 KS) acquired a 3.7% stake (868,948 shares) in SM Entertainment Co (041510 KS) for 104.3 billion won.</li>
<li>HYBE's acquisition of shares was accomplished through the exercise of a put option by SM Entertainment's founder Lee Soo-Man. After this purchase, HYBE will own 12.6% stake in SM Entertainment. </li>
<li>We like SM Entertainment at current levels. Valuations are attractive and there is a strong pipeline of new music/songs to be launched by its artists in 2Q 2024. </li>
</ul>


After the market close, it was announced that HYBE (352820 KS) acquired a 3.7% stake (868,948 shares) in SM Entertainment Co (041510 KS) for 104.3 billion won.
HYBE's acquisition of shares was accomplished through the exercise of a put option by SM Entertainment's founder Lee Soo-Man. After this purchase, HYBE will own 12.6% stake in SM Entertainment. 
We like SM Entertainment at current levels. Valuations are attractive and there is a strong pipeline of new music/songs to be launched by its artists in 2Q 2024. 


HYBE Invests Additional 104 Billion Won in SM Entertainment - Why?

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

Index Rebalance

<ul>
<li>The review period for a global index and a bunch of local indices ended last week. The announcement of the changes will be made in 1 week to 4 weeks.</li>
<li>
<a href="https://www.smartkarma.com/entities/strike-energy-ltd" target="_blank" data-smartkarma-citation="entities:12473:1" rel="noopener">Strike Energy (STX AU)</a> will replace <a href="https://www.smartkarma.com/entities/costa-group-holdings-ltd" target="_blank" data-smartkarma-citation="entities:22632:1" rel="noopener">Costa Group Holdings (CGC AU)</a> in the <a href="https://www.smartkarma.com/entities/s-p-asx-200" target="_blank" data-smartkarma-citation="entities:22901:1" rel="noopener">S&amp;P/ASX 200 (AS51 INDEX)</a> at the close on 8 February.</li>
<li>The inflows to mainland China ETFs continue for another week. There were big inflows to <a href="https://www.smartkarma.com/entities/ishares-msci-india-etf" target="_blank" data-smartkarma-citation="entities:282:1" rel="noopener">iShares India ETF (INDA US)</a> and <a href="https://www.smartkarma.com/entities/ishares-msci-india-small-cap" target="_blank" data-smartkarma-citation="entities:32064:1" rel="noopener">Ishares India Small-Cap (SMIN US)</a>. </li>
</ul>


The review period for a global index and a bunch of local indices ended last week. The announcement of the changes will be made in 1 week to 4 weeks.

Strike Energy (STX AU) will replace Costa Group Holdings (CGC AU) in the S&amp;P/ASX 200 (AS51 INDEX) at the close on 8 February.
The inflows to mainland China ETFs continue for another week. There were big inflows to iShares India ETF (INDA US) and Ishares India Small-Cap (SMIN US). 


Index Rebalance & ETF Flow Recap: N225, ASX, STAR50, NIFTY50, KRX New Deal, UOL SP, Korea Passive

<ul>
<li>There are a few stocks in Korea that have outperformed/ underperformed their peers and could be added to or deleted from global passive portfolios next month.</li>
<li>There could be buying in <a href="https://www.smartkarma.com/entities/ecopro-materials" target="_blank" data-smartkarma-citation="entities:36806:1" rel="noopener">EcoPro Materials</a> and <a href="https://www.smartkarma.com/entities/hanjin-kal-corp" target="_blank" data-smartkarma-citation="entities:19086:1" rel="noopener">Hanjin KAL</a> while <a href="https://www.smartkarma.com/entities/hotel-shilla-co-ltd" target="_blank" data-smartkarma-citation="entities:107:1" rel="noopener">Hotel Shilla</a>, <a href="https://www.smartkarma.com/entities/pearl-abyss-corp" target="_blank" data-smartkarma-citation="entities:24391:1" rel="noopener">Pearl Abyss</a>, <a href="https://www.smartkarma.com/entities/f-f-co-ltd-new" target="_blank" data-smartkarma-citation="entities:33479:1" rel="noopener">F&amp;F</a>, <a href="https://www.smartkarma.com/entities/hyundai-mipo-dockyard" target="_blank" data-smartkarma-citation="entities:2755:1" rel="noopener">Hyundai Mipo Dockyard</a>, <a href="https://www.smartkarma.com/entities/hanon-systems" target="_blank" data-smartkarma-citation="entities:11506:1" rel="noopener">Hanon Systems</a> and <a href="https://www.smartkarma.com/entities/jyp-entertainment-corp" target="_blank" data-smartkarma-citation="entities:17598:1" rel="noopener">Jyp Entertainment</a> could be sold.</li>
<li>There will be a lot of flow on the stocks and passive trackers will need to trade over 7 days of ADV in most stocks.</li>
</ul>


There are a few stocks in Korea that have outperformed/ underperformed their peers and could be added to or deleted from global passive portfolios next month.
There could be buying in EcoPro Materials and Hanjin KAL while Hotel Shilla, Pearl Abyss, F&amp;F, Hyundai Mipo Dockyard, Hanon Systems and Jyp Entertainment could be sold.
There will be a lot of flow on the stocks and passive trackers will need to trade over 7 days of ADV in most stocks.


Korea: Stocks with Near-Term Potential Passive Flows

Asia Pac ECM and Index Rebal, Shenton Research

Ke Yan, CFA, FRM

Asia Pac ECM and Index Rebal

Asia Pac IPO & Placement Research, China Biotech

DZT Research

DZT Research is an independent Asia Pacific equity specialist. Our quantitative research covers index rebalancing flows, alongside exchange data analytics accross Asia Pacific. On the equity capital markets side, we focus on Asia Pacific ECM, especially biotech and TMT. Our lead analyst is frequently cited by international media.

Quantitative Analysis

<ul>
<li>We analyzed the changes in foreign holdings of KRX Stocks as of Jan 26th which has an aggregated holding worth USD476.8bn.</li>
<li>We estimate that foreign flows to be inflows of USD1,189mln. We tabulate the league table for top changes by value for 1W/4W/1Y and top stocks held by foreign institutions.</li>
<li>We highlight foreign changes in Samsung Electronics, Ecopro, Samsung Biologic, Samsung SDI.</li>
</ul>


We analyzed the changes in foreign holdings of KRX Stocks as of Jan 26th which has an aggregated holding worth USD476.8bn.
We estimate that foreign flows to be inflows of USD1,189mln. We tabulate the league table for top changes by value for 1W/4W/1Y and top stocks held by foreign institutions.
We highlight foreign changes in Samsung Electronics, Ecopro, Samsung Biologic, Samsung SDI.


KRX Foreign Holding Weekly (Jan 26th): Samsung Electronics, Ecopro, Samsung Biologic, Samsung SDI

<ul>
<li>After the market close on 6 November, Netmarble announced that it will sell 2.5 million shares of HYBE which represents 569 billion won in amount at current price. </li>
<li>The actual block deal amount is likely to be less than 569 billion won as there will likely be a  block deal discount rate. </li>
<li>We would avoid this deal, mainly because we think HYBE is overvalued relative to its peers. </li>
</ul>


After the market close on 6 November, Netmarble announced that it will sell 2.5 million shares of HYBE which represents 569 billion won in amount at current price. 
The actual block deal amount is likely to be less than 569 billion won as there will likely be a  block deal discount rate. 
We would avoid this deal, mainly because we think HYBE is overvalued relative to its peers. 


South Korea

JYP Entertainment Corp plans, produces, promotes, and markets Korean singers both in Korean and overseas market. The Company's also engages in licensing, merchandizing, and artist management business including the commercial flim contracts of the artists.

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Jyp Entertainment (035900 KS)

HYBE Invests Additional 104 Billion Won in SM Entertainment - Why?

After the market close, it was announced that HYBE acquired a 3.7% stake in SM Entertainment Co for 104.3 billion won. After this purchase, HYBE...

Douglas Kim

Index Rebalance & ETF Flow Recap: N225, ASX, STAR50, NIFTY50, KRX New Deal, UOL SP, Korea Passive

This recap highlights Insights covering Asian index rebalances (announcements/ forecasts/ IPO Fast Entry/ M&A driven changes). We also highlight...

Brian Freitas

Korea: Stocks with Near-Term Potential Passive Flows

There are 8 Korean stocks that could see trading activity from global passive trackers in the next few weeks. EcoPro Materials and Hanjin Kal could...

Brian Freitas

KRX Foreign Holding Weekly (Jan 26th): Samsung Electronics, Ecopro, Samsung Biologic, Samsung SDI

We analyzed KRX foreign holding data for the past week and highlighted foreign holding changes in Samsung Electronics, Ecopro, Samsung Biologic,...

Ke Yan, CFA, FRM

Block Deal Sale of HYBE by Netmarble

After the market close on 6 November, Netmarble announced that it will sell 2.5 million shares of HYBE. We would avoid this deal, mainly because we...

Douglas Kim

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