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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Index Rebalance

Post market close on 3 August, the KRX announced that <a href="https://www.smartkarma.com/entities/skckolonpi-inc" target="_blank" data-smartkarma-citation="entities:9196:1" rel="noopener">Skckolonpi Inc (178920 KS)</a> would be deleted from the <a href="https://www.smartkarma.com/entities/kosdaq-150-index" target="_blank" data-smartkarma-citation="entities:31077:1" rel="noopener">KOSDAQ 150 Index (KOSDQ150 INDEX)</a> following the move of the stock from the KOSDAQ market to the KOSPI market.<a href="https://www.smartkarma.com/entities/kpm-tech-co-ltd" target="_blank" data-smartkarma-citation="entities:15948:1" rel="noopener">Kpm Tech Co Ltd (042040 KS)</a> will be added to the index as a replacement to take the number of constituents back to 150.The changes will be effective after the close of trading on Friday, 6 August.The change will make <a href="https://www.smartkarma.com/entities/skckolonpi-inc" target="_blank" data-smartkarma-citation="entities:9196:1" rel="noopener">Skckolonpi Inc (178920 KS)</a> ineligible for short selling while <a href="https://www.smartkarma.com/entities/kpm-tech-co-ltd" target="_blank" data-smartkarma-citation="entities:15948:1" rel="noopener">Kpm Tech Co Ltd (042040 KS)</a> will become eligible for short selling.<a href="https://www.smartkarma.com/entities/skckolonpi-inc" target="_blank" data-smartkarma-citation="entities:9196:1" rel="noopener">Skckolonpi Inc (178920 KS)</a> belongs to the Materials sector and will be a very close add to 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> at the December rebalance.Passive funds will need to sell 2.45 days of ADV on <a href="https://www.smartkarma.com/entities/skckolonpi-inc" target="_blank" data-smartkarma-citation="entities:9196:1" rel="noopener">Skckolonpi Inc (178920 KS)</a> and buy 1 day of ADV on <a href="https://www.smartkarma.com/entities/kpm-tech-co-ltd" target="_blank" data-smartkarma-citation="entities:15948:1" rel="noopener">Kpm Tech Co Ltd (042040 KS)</a>. There are only 3 days to the implementation of the changes.

Post market close on 3 August, the KRX announced that Skckolonpi Inc (178920 KS) would be deleted from the KOSDAQ 150 Index (KOSDQ150 INDEX) following the move of the stock from the KOSDAQ market to the KOSPI market.Kpm Tech Co Ltd (042040 KS) will be added to the index as a replacement to take the number of constituents back to 150.The changes will be effective after the close of trading on Friday, 6 August.The change will make Skckolonpi Inc (178920 KS) ineligible for short selling while Kpm Tech Co Ltd (042040 KS) will become eligible for short selling.Skckolonpi Inc (178920 KS) belongs to the Materials sector and will be a very close add to the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) at the December rebalance.Passive funds will need to sell 2.45 days of ADV on Skckolonpi Inc (178920 KS) and buy 1 day of ADV on Kpm Tech Co Ltd (042040 KS). There are only 3 days to the implementation of the changes.

KOSDAQ150 Index Rebalance: PIAM Transfer to KOSPI; Is Replaced by KPM Tech

Chart based progressive global trading strategies, Chart Partners

Thomas Schroeder

Chart based progressive global trading strategies

Chart Partners

Chart Partners objective is to discover medium-term cycle turns and profit opportunities before they unfold, within structural trends while preserving capital with clear degrees of risk. We have real return ideas. 

Markets are dynamic and trading systems must reflect this. It is crucial to determine underlying correlations and lead-lag relationships within global markets and the impact on linked instruments. Our weekly Chartonics product gives you short-term trading strategies that can be applied within the medium and longer term macro trends that are mapped out in our strategy updates. 

Our methodology fuses global market variables and isolates drivers in trends. We specialize in FX, index trade in NY and Asia with a focus on Asian stocks. 

Technical Analysis

Korea Stock Exchange KOSPI 200 / Technical Analysis

As China/HK and Japan reach for oversold cycle lows, our attention shifts to Korea and Taiwan as short rotation candidates as both have backed of of key resistance zones and vulnerable into an exhaustive US rally cycle.Nikkei lower wedge support remains our ideal downside target. HSI undershoot to 24,600 but 27,000 is now formidable resistance.Korea and Taiwan are closer to key has and backing off of resistance zones, making them more vulnerable to an exhaustive NDX cycle.<div><div>Key takeaway - Nikkei and HSI expected to outperform Korea and Taiwan from noted low zones after the next leg down is complete.</div></div>

As China/HK and Japan reach for oversold cycle lows, our attention shifts to Korea and Taiwan as short rotation candidates as both have backed of of key resistance zones and vulnerable into an exhaustive US rally cycle.Nikkei lower wedge support remains our ideal downside target. HSI undershoot to 24,600 but 27,000 is now formidable resistance.Korea and Taiwan are closer to key has and backing off of resistance zones, making them more vulnerable to an exhaustive NDX cycle.Key takeaway - Nikkei and HSI expected to outperform Korea and Taiwan from noted low zones after the next leg down is complete.

There could be two changes to 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> at the September index futures expiry with <a href="https://www.smartkarma.com/entities/kakaobank-corp" target="_blank" data-smartkarma-citation="entities:33501:1" rel="noopener">KakaoBank (1349010D KS)</a> and <a href="https://www.smartkarma.com/entities/krafton-inc" target="_blank" data-smartkarma-citation="entities:28956:1" rel="noopener"> Krafton Inc (259960 KS)</a> getting Fast Entry and replacing <a href="https://www.smartkarma.com/entities/lock-lock-co-ltd" target="_blank" data-smartkarma-citation="entities:4739:1" rel="noopener">Lock&amp;Lock (115390 KS)</a> and <a href="https://www.smartkarma.com/entities/jw-pharmaceutical-corp" target="_blank" data-smartkarma-citation="entities:18784:1" rel="noopener">Jw Pharmaceutical (001060 KS)</a> at the close of trading on 9 September.Then, the Korea Exchange (KRX) will announce the results of the December 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 November. The constituent changes will be effective after the close of trading on 9 December.We see 5 potential changes at the December rebalance with <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 (383220 KS)</a>, <a href="https://www.smartkarma.com/entities/sl-corp" target="_blank" data-smartkarma-citation="entities:20694:1" rel="noopener">SL Corp (005850 KS)</a>, <a href="https://www.smartkarma.com/entities/geneone-life-science-inc" target="_blank" data-smartkarma-citation="entities:6549:1" rel="noopener">GeneOne Life Science Inc. (011000 KS)</a>, <a href="https://www.smartkarma.com/entities/myoung-shin-industrial-co-ltd" target="_blank" data-smartkarma-citation="entities:29698:1" rel="noopener">Myoung Shin Industrial Co.,Ltd (009900 KS)</a> and <a href="https://www.smartkarma.com/entities/hyosung-chemical-corp" target="_blank" data-smartkarma-citation="entities:27752:1" rel="noopener">Hyosung Chemical Corp (298000 KS)</a> replacing <a href="https://www.smartkarma.com/entities/f-f-co-ltd" target="_blank" data-smartkarma-citation="entities:15983:1" rel="noopener">F&amp;F Co Ltd (007700 KS)</a>, <a href="https://www.smartkarma.com/entities/samyang-foods-co-ltd" target="_blank" data-smartkarma-citation="entities:9100:1" rel="noopener">Samyang Foods (003230 KS)</a>, <a href="https://www.smartkarma.com/entities/ilyang-pharmaceutical-co-ltd" target="_blank" data-smartkarma-citation="entities:2789:1" rel="noopener">Ilyang Pharmaceutical Co., (007570 KS)</a>, <a href="https://www.smartkarma.com/entities/lx-holdings" target="_blank" data-smartkarma-citation="entities:33384:1" rel="noopener">LX Holdings (383800 KS)</a> and <a href="https://www.smartkarma.com/entities/dongwon-f-b-co-ltd" target="_blank" data-smartkarma-citation="entities:3274:1" rel="noopener">Dongwon F&amp;B (049770 KS)</a>.The potential inclusions have been outperforming the potential exclusions and this could continue as short selling is only permitted on index constituents and as active funds position for the rebalance following excellent returns at the June rebalance.

There could be two changes to the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) at the September index futures expiry with KakaoBank (1349010D KS) and  Krafton Inc (259960 KS) getting Fast Entry and replacing Lock&amp;Lock (115390 KS) and Jw Pharmaceutical (001060 KS) at the close of trading on 9 September.Then, the Korea Exchange (KRX) will announce the results of the December 2021 review of the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) in November. The constituent changes will be effective after the close of trading on 9 December.We see 5 potential changes at the December rebalance with F&amp;F (383220 KS), SL Corp (005850 KS), GeneOne Life Science Inc. (011000 KS), Myoung Shin Industrial Co.,Ltd (009900 KS) and Hyosung Chemical Corp (298000 KS) replacing F&amp;F Co Ltd (007700 KS), Samyang Foods (003230 KS), Ilyang Pharmaceutical Co., (007570 KS), LX Holdings (383800 KS) and Dongwon F&amp;B (049770 KS).The potential inclusions have been outperforming the potential exclusions and this could continue as short selling is only permitted on index constituents and as active funds position for the rebalance following excellent returns at the June rebalance.

KOSPI200 Index Rebalance Preview: Two Changes in September; Five in December

Asia market long ideas into weakness are challenging with short themes dominating in Japan, HK and Korea (next to buckle). ASX banks tops our long list followed by bottom digging in HK tech. Taiwan is resting on bull/bear support.A clear bear lean is noted in Asia and parts of Europe compared to the US powerhouse upcycle that is near a tactical topping zone. Our cycle work calls for a ST US top today/Monday for a dip and then upside re test in late July with August seasonality turning bearish. Asia will front run a US top.

Asia market long ideas into weakness are challenging with short themes dominating in Japan, HK and Korea (next to buckle). ASX banks tops our long list followed by bottom digging in HK tech. Taiwan is resting on bull/bear support.A clear bear lean is noted in Asia and parts of Europe compared to the US powerhouse upcycle that is near a tactical topping zone. Our cycle work calls for a ST US top today/Monday for a dip and then upside re test in late July with August seasonality turning bearish. Asia will front run a US top.

Event-Driven

Taiwan Stock Exchange Weighted Index / Event-Driven

The <a href="https://www.smartkarma.com/entities/taiwan-stock-exchange-weighted-index" target="_blank" data-smartkarma-citation="entities:26056:1" rel="noopener">Taiwan Stock Exchange Weighted Index (TWSE INDEX)</a> is 17.5% higher from its lows a couple of months ago. The margin balance is also at a new high and has risen by nearly US$3bn over the last 2 months.At the same time, short notional has increased by US$3.7bn. Of the increase, only US$470m has come from new shorts being created while the rest is a result of higher stock prices.The <a href="https://www.smartkarma.com/entities/taiwan-stock-exchange-weighted-index" target="_blank" data-smartkarma-citation="entities:26056:1" rel="noopener">Taiwan Stock Exchange Weighted Index (TWSE INDEX)</a> is one of the best performing Asian markets over the last year and could be susceptible to a pullback. The sharp increase in margin balance could lead to an equally sharp unwind that could lead to a repeat of the forced selling in May.With geo-political tensions and the COVID19 variants still around, plus the higher margin balances, we would look to reduce long positions in Taiwan or put appropriate hedges in place to cushion the impact of a sharp selloff in markets.

The Taiwan Stock Exchange Weighted Index (TWSE INDEX) is 17.5% higher from its lows a couple of months ago. The margin balance is also at a new high and has risen by nearly US$3bn over the last 2 months.At the same time, short notional has increased by US$3.7bn. Of the increase, only US$470m has come from new shorts being created while the rest is a result of higher stock prices.The Taiwan Stock Exchange Weighted Index (TWSE INDEX) is one of the best performing Asian markets over the last year and could be susceptible to a pullback. The sharp increase in margin balance could lead to an equally sharp unwind that could lead to a repeat of the forced selling in May.With geo-political tensions and the COVID19 variants still around, plus the higher margin balances, we would look to reduce long positions in Taiwan or put appropriate hedges in place to cushion the impact of a sharp selloff in markets.

Taiwan: TWSE & Margin Balance at New Highs

South Korea

The KOSPI 200 Index is a capitalization-weighted index of 200 Korean stocks which make up 93% of the total market value of the Korea Stock Exchange. The index was developed with a base value of 100 as of January 3, 1990.

Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX EQUITY)

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Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX EQUITY)

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Brian Freitas

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As China/HK and Japan reach for oversold cycle lows, our attention shifts to Korea and Taiwan as short rotation candidates as both have backed of...

Thomas Schroeder

KOSPI200 Index Rebalance Preview: Two Changes in September; Five in December

We see 2 potential Fast Entry changes in September & then 5 more changes at the December rebalance. The adds are outperforming the deletes and the...

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Asia market short themes dominating in Japan, HK and Korea (next to buckle). ASX banks tops our long list followed by bottom digging in HK tech....

Thomas Schroeder

Taiwan: TWSE & Margin Balance at New Highs

The TWSE and margin balances are both at a new high. With geo-political concerns and COVID-19 still major factors, we would look to lower long...

Brian Freitas

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52-week Range

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