Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Private Capital Markets

<ul>
<li>K Bank is the first Internet-only bank in Korea. K Bank is the second largest Internet bank in Korea after KakaoBank (323410 KS).</li>
<li>K Bank had revenues of 282.1 billion won (up 263.6% YoY) and operating profit of 24.5 billion won (turned black YoY) in 2021.</li>
<li>The recent declines in major cryptocurrencies are likely to have a negative impact on K Bank which could delay its IPO until 2023.</li>
</ul>


K Bank is the first Internet-only bank in Korea. K Bank is the second largest Internet bank in Korea after KakaoBank (323410 KS).
K Bank had revenues of 282.1 billion won (up 263.6% YoY) and operating profit of 24.5 billion won (turned black YoY) in 2021.
The recent declines in major cryptocurrencies are likely to have a negative impact on K Bank which could delay its IPO until 2023.


K Bank: The First Internet-Only Bank In Korea

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

Event-Driven

<ul>
<li>On 20 May, we recommended selling <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> and 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>. That trade is up 12% over the last month.</li>
<li>Foreign investors have sold 2.5m shares of <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> in the last month while buying 2.8m shares of <a href="https://www.smartkarma.com/entities/kt-corp" target="_blank" data-smartkarma-citation="entities:1112:1" rel="noopener">KT Corp (030200 KS)</a>. </li>
<li>With the price ratio trading at a 4 year low, we feel is is time to start unwinding the trade and waiting for a little bit before reversing it.</li>
</ul>


On 20 May, we recommended selling SK Telecom (017670 KS) and buying KT Corp (030200 KS). That trade is up 12% over the last month.
Foreign investors have sold 2.5m shares of SK Telecom (017670 KS) in the last month while buying 2.8m shares of KT Corp (030200 KS). 
With the price ratio trading at a 4 year low, we feel is is time to start unwinding the trade and waiting for a little bit before reversing it.


SK Telecom / KT Corp: Foreign Room, Passive Flow & Trade Update

<ul>
<li>It was reported that KT will provide an extra 15% to its employees who purchase KT's treasury shares worth 5 million won ($4,000) to 20 million won ($16,000).</li>
<li>We have a positive view of this extra 15% bonus for ESOP treasury shares purchase. It has the positive effect of increasing demand for KT shares among its employees.</li>
<li>If 10,000 employees purchase 10 million won per person, this would be 115 billion won in total (including 15% extra provided by KT). </li>
</ul>


It was reported that KT will provide an extra 15% to its employees who purchase KT's treasury shares worth 5 million won ($4,000) to 20 million won ($16,000).
We have a positive view of this extra 15% bonus for ESOP treasury shares purchase. It has the positive effect of increasing demand for KT shares among its employees.
If 10,000 employees purchase 10 million won per person, this would be 115 billion won in total (including 15% extra provided by KT). 


KT Grants Extra 15% for ESOP Treasury Shares Purchase

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<ul>
<li>The DAX and Hang Seng are reversing their downtrends while MSCI China (MCHI-US) and China Internet (KWEB-US) are currently testing their respective multi-month downtrends.</li>
<li>Reversals of these downtrends would signal a bear market rally in progress.</li>
<li>We will need to see more basing, followed by base breakouts, in order to get bullish -- a process that would likely take weeks or months.</li>
</ul>


The DAX and Hang Seng are reversing their downtrends while MSCI China (MCHI-US) and China Internet (KWEB-US) are currently testing their respective multi-month downtrends.
Reversals of these downtrends would signal a bear market rally in progress.
We will need to see more basing, followed by base breakouts, in order to get bullish -- a process that would likely take weeks or months.


Still Bearish, But On Watch for Bear Market Rally; Buying Toshiba 6502-JP, Defensive Sectors

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.

<ul>
<li>The debating point is whether ADRs can be created from local underlying shares once the FOL is hit if the ADR issuance cap isn't entirely burned.</li>
<li>The answer is Yes. ADRs can still be created. That is one of the exceptions that the Korea FSS allows for exceeding the foreign ownership limit.</li>
<li>This is why we saw a hefty premium on KT ADR when it reached and stayed at zero foreign room since 2015 AND an increase in ADRs through DR creation.</li>
</ul>


The debating point is whether ADRs can be created from local underlying shares once the FOL is hit if the ADR issuance cap isn't entirely burned.
The answer is Yes. ADRs can still be created. That is one of the exceptions that the Korea FSS allows for exceeding the foreign ownership limit.
This is why we saw a hefty premium on KT ADR when it reached and stayed at zero foreign room since 2015 AND an increase in ADRs through DR creation.


SK Telecom: Clarifications over ADR Creation & Premium with Zero Foreign Room

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)

K Bank: The First Internet-Only Bank In Korea

K Bank is the second largest Internet bank in Korea. K Bank had revenues of 282.1 billion won (up 263.6% YoY) and operating profit of 24.5 billion...

Douglas Kim

SK Telecom / KT Corp: Foreign Room, Passive Flow & Trade Update

SK Telecom has underperformed KT Corp by 12% over the last month. Foreign investors have been selling SK Tel & buying KT Corp. The price ratio is...

Brian Freitas

KT Grants Extra 15% for ESOP Treasury Shares Purchase

It was reported that KT will provide an extra 15% to its employees who purchase KT's treasury shares worth 5 million won ($4,000) to 20 million won...

Douglas Kim

Still Bearish, But On Watch for Bear Market Rally; Buying Toshiba 6502-JP, Defensive Sectors

The $DAX and Hang Seng are reversing their downtrends while China $MCHI and China Internet $KWEB are currently testing their respective multi-month...

Vermilion Research

SK Telecom: Clarifications over ADR Creation & Premium with Zero Foreign Room

This post clarifies whether ADRs can still be created for FOL stocks like SKT even when the foreign ownership limit is reached.

Sanghyun Park

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