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 cutoff market cap is around ₩3.6T, and Hyundai Rotem is the only stock that screens into the inclusion zone.</li>
<li>Hyundai Rotem might see a repeat of LS Electric’s pattern: heavy chasing towards screening and a big dive at the decision. Watch for aggressive momentum trades starting late September.</li>
<li>The stock with the lowest full market cap, Kum Yang, is at risk, but Celltrion Pharm is close behind. KT Corp’s exclusion might save Kum Yang or Celltrion Pharm.</li>
</ul>


The cutoff market cap is around ₩3.6T, and Hyundai Rotem is the only stock that screens into the inclusion zone.
Hyundai Rotem might see a repeat of LS Electric’s pattern: heavy chasing towards screening and a big dive at the decision. Watch for aggressive momentum trades starting late September.
The stock with the lowest full market cap, Kum Yang, is at risk, but Celltrion Pharm is close behind. KT Corp’s exclusion might save Kum Yang or Celltrion Pharm.


Global Index Korea: Hyundai Rotem Is the Only One Screened. Watch for a Possible LS Electric Repeat

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Douglas Research Advisory

Equity Capital Markets

<ul>
<li>K Bank finally provided its IPO prospectus which includes more details of the IPO than what the company already announced about the IPO several days ago. </li>
<li>Bankers used KakaoBank, SBI Sumishin Net Bank, and Bancorp Inc as comps. Average PBR of 2.56x was used to value K Bank. </li>
<li>Some investors will question the inclusion of overseas comps including SBI Sumishin Net Bank and Bancorp in the valuation of K Bank.</li>
</ul>


K Bank finally provided its IPO prospectus which includes more details of the IPO than what the company already announced about the IPO several days ago. 
Bankers used KakaoBank, SBI Sumishin Net Bank, and Bancorp Inc as comps. Average PBR of 2.56x was used to value K Bank. 
Some investors will question the inclusion of overseas comps including SBI Sumishin Net Bank and Bancorp in the valuation of K Bank.


Index Rebalance

<ul>
<li>KT’s foreign room is likely staying below 3.75% for November, setting up an ETF recall play. We've seen short-term buying pressure in similar past index reshuffles.</li>
<li>The ETF recall impact peaks right after the announcement. KT’s May downweight saw a 5% spike in two trading days post-announcement.</li>
<li>KT’s price moves more with downweights than SK Telecom’s because of higher overseas borrowing demand. This trend should hold, so setting up a position before the November announcement makes sense.</li>
</ul>


KT’s foreign room is likely staying below 3.75% for November, setting up an ETF recall play. We've seen short-term buying pressure in similar past index reshuffles.
The ETF recall impact peaks right after the announcement. KT’s May downweight saw a 5% spike in two trading days post-announcement.
KT’s price moves more with downweights than SK Telecom’s because of higher overseas borrowing demand. This trend should hold, so setting up a position before the November announcement makes sense.


Timing a Trade to Capitalize on KT’s November Global Index Deletion and the ETF Recall

CEO, A. Stotz Investment Research

Dr. Andrew Stotz, CFA

Quantamental Investing to beat Benchmarks

A. Stotz Investment Research

We pick stocks. We construct portfolios. All our effort is focused on how to better pick stocks and construct portfolios. We serve fund management companies, family offices, and high net worth individuals.

Thematic (Sector/Industry)

<ul>
<li>We highlight 14 stocks in Asia that look interesting to us based on our FVMR methodology</li>
<li>Portfolio changes: Two stock remains, 12 stocks added into portfolio</li>
<li>Since its inception, it has generated a before-fee total return of 168% versus the MSCI Asia ex Japan of 82%</li>
</ul>


We highlight 14 stocks in Asia that look interesting to us based on our FVMR methodology
Portfolio changes: Two stock remains, 12 stocks added into portfolio
Since its inception, it has generated a before-fee total return of 168% versus the MSCI Asia ex Japan of 82%


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

<ul>
<li>Foreign investors have continued buying <a href="https://www.smartkarma.com/entities/kt-corp" target="_blank" data-smartkarma-citation="entities:1112:1" rel="noopener">KT Corp (030200 KS)</a> and the stock has outperformed <a href="https://www.smartkarma.com/entities/sk-telecom-co-ltd-bbccd86c-474d-4a4d-946d-10e911a225a2" target="_blank" data-smartkarma-citation="entities:395:1" rel="noopener">SK Telecom (017670 KS)</a>, though not by a lot. </li>
<li>Foreign buying has pushed foreign room in <a href="https://www.smartkarma.com/entities/kt-corp" target="_blank" data-smartkarma-citation="entities:1112:1" rel="noopener">KT Corp (030200 KS)</a> below 3.75% and the stock could be deleted from a global index at the next rebalance.</li>
<li>There will be some interesting trading dynamics in <a href="https://www.smartkarma.com/entities/kt-corp" target="_blank" data-smartkarma-citation="entities:1112:1" rel="noopener">KT Corp (030200 KS)</a> over the next couple of months and there will be trading opportunities versus its peers.</li>
</ul>


Foreign investors have continued buying KT Corp (030200 KS) and the stock has outperformed SK Telecom (017670 KS), though not by a lot. 
Foreign buying has pushed foreign room in KT Corp (030200 KS) below 3.75% and the stock could be deleted from a global index at the next rebalance.
There will be some interesting trading dynamics in KT Corp (030200 KS) over the next couple of months and there will be trading opportunities versus its peers.


KT Corp (030200 KS): Foreign Room Drops Below Critical Level; Passive Selling to Come

South Korea

KT Corporation provides telecommunication services including local, long distance, and international calling, satellite communication, data transmission, and wireless telephone services in South Korea.  The Company also offers network portal and high-speed Internet access services using asymmetric digital subscriber lines (ADSLs).

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KT Corp Sp Adr (KT US)

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In the November review of the Global Index Korea Standard, Hyundai Rotem is the only stock that screens in. This post explores whether Hyundai...

Sanghyun Park

K Bank IPO Preview

K Bank provided its IPO prospectus which has more details of the IPO than what the company already announced about the IPO several days ago....

Douglas Kim

Timing a Trade to Capitalize on KT’s November Global Index Deletion and the ETF Recall

This post discusses the high likelihood of KT being booted from the November Global Index review due to its foreign room staying below 3.75%, and...

Sanghyun Park

The Stocks to Own in Asia – Vol. 46

We highlight 14 stocks in Asia that look interesting to us based on our FVMR methodology. Portfolio changes: Two stock remains, 12 stocks added.

A. Stotz Investment Research

KT Corp (030200 KS): Foreign Room Drops Below Critical Level; Passive Selling to Come

KT Corp's foreign room has dropped below 3.75% and that could result in deletion from a global index in November. Foreign buying has been...

Brian Freitas

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