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>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

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Douglas Research Advisory

Equity Bottom-Up

<ul>
<li>We have a Positive view of KT Corp (030200 KS) due to three main reasons.</li>
<li>First, KT has started to implement aggressive capital return policy (returning 50% of net income through dividends and share buybacks/cancellations). Two other reasons include Corporate Value Up and higher Smartscore.</li>
<li>KT Corp has been the best performing stock among the three major Korean telcos in the past one year. KT Corp's shares are up 27.9% in the past one year.</li>
</ul>


We have a Positive view of KT Corp (030200 KS) due to three main reasons.
First, KT has started to implement aggressive capital return policy (returning 50% of net income through dividends and share buybacks/cancellations). Two other reasons include Corporate Value Up and higher Smartscore.
KT Corp has been the best performing stock among the three major Korean telcos in the past one year. KT Corp's shares are up 27.9% in the past one year.


Equity Capital Markets

<ul>
<li>In this insight, we provide an update on the K Bank IPO, which is more likely in 1H 2025. K Bank is one of the largest Internet-only banks in Korea. </li>
<li>A successful IPO of K Bank could have a positive impact on KT Corp (030200 KS) which is the indirectly the largest shareholder of K Bank. </li>
<li>K Bank had total operating income of 51.5 billion won (up 328% YoY) in 1Q 2024. Operating margin improved materially from 5.7% in 1Q 2023 to 19.5% in 1Q 2024.</li>
</ul>


In this insight, we provide an update on the K Bank IPO, which is more likely in 1H 2025. K Bank is one of the largest Internet-only banks in Korea. 
A successful IPO of K Bank could have a positive impact on KT Corp (030200 KS) which is the indirectly the largest shareholder of K Bank. 
K Bank had total operating income of 51.5 billion won (up 328% YoY) in 1Q 2024. Operating margin improved materially from 5.7% in 1Q 2023 to 19.5% in 1Q 2024.


Korea / Special Sits, Pairs, Index Rebalancing, Clepsydra Capital

Sanghyun Park

Korea / Special Sits, Pairs, Index Rebalancing

Clepsydra Capital

Investigate special situations, pairs, and index rebalancing trades in Korea.

<ul>
<li>KT's foreign room has been exhausted due to value-up trading inflows, NPS selling shares, and KT canceling treasury stocks.</li>
<li>Hyundai Motor may sell 0.5% of its KT stake, likely to overseas investors. KT's 700,000 share cancellation will lower foreign ownership to the low-4% range, possibly below 3.75% by November.</li>
<li>Focus on the stock price surge from ETF recall requests around the effective date, and note that passive outflow corrections typically occur afterward.</li>
</ul>


KT's foreign room has been exhausted due to value-up trading inflows, NPS selling shares, and KT canceling treasury stocks.
Hyundai Motor may sell 0.5% of its KT stake, likely to overseas investors. KT's 700,000 share cancellation will lower foreign ownership to the low-4% range, possibly below 3.75% by November.
Focus on the stock price surge from ETF recall requests around the effective date, and note that passive outflow corrections typically occur afterward.


Reasons Why KT's Foreign Room Is Likely to Fall Below the 3.75% Cutoff Level

<ul>
<li>Hyundai Motor Group has become the largest shareholder of KT Corp, as the National Pension Service has recently reduced its stake in KT from 8.53% previously to 7.51%. </li>
<li>Despite this recent change in the largest shareholder status of KT Corp, this requires the approval from the Korean Ministry of Science and ICT. </li>
<li>Although the Hyundai Motor Group (HMG) has become the largest owner in KT Corp, the most likely scenario is for HMG to remain a passive investor in KT.</li>
</ul>


Hyundai Motor Group has become the largest shareholder of KT Corp, as the National Pension Service has recently reduced its stake in KT from 8.53% previously to 7.51%. 
Despite this recent change in the largest shareholder status of KT Corp, this requires the approval from the Korean Ministry of Science and ICT. 
Although the Hyundai Motor Group (HMG) has become the largest owner in KT Corp, the most likely scenario is for HMG to remain a passive investor in KT.


Hyundai Motor Group Becomes the Largest Shareholder of KT Corp

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 (030200 KS)

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

Asian Dividend Gems: KT Corp

Positive outlook on KT Corp (030200 KS) due to aggressive capital return policy, Corporate Value Up, and higher Smartscore leading to strong stock...

Douglas Kim

Initial Thoughts on the K Bank IPO

Update on K Bank IPO: Likely in 1H 2025, potential positive impact on KT Corp as largest indirect shareholder, impressive financial growth in 1Q...

Douglas Kim

Reasons Why KT's Foreign Room Is Likely to Fall Below the 3.75% Cutoff Level

This post examines the reasons why KT's foreign room is likely to fall below the 3.75% cutoff level before the November review.

Sanghyun Park

Hyundai Motor Group Becomes the Largest Shareholder of KT Corp

On 9 May, KT Corp (030200 KS) announced that it will cancel 5.1 million treasury shares (about 2% of outstanding shares), representing...

Douglas Kim

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

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

Asian Dividend Gems: KT Corp

​Positive outlook on KT Corp (030200 KS) due to aggressive capital return policy, Corporate Value Up, and higher Smartscore leading to strong stock...

Douglas Kim

Initial Thoughts on the K Bank IPO

​Update on K Bank IPO: Likely in 1H 2025, potential positive impact on KT Corp as largest indirect shareholder, impressive financial growth in 1Q...

Douglas Kim

Reasons Why KT's Foreign Room Is Likely to Fall Below the 3.75% Cutoff Level

This post examines the reasons why KT's foreign room is likely to fall below the 3.75% cutoff level before the November review.

Sanghyun Park

Hyundai Motor Group Becomes the Largest Shareholder of KT Corp

On 9 May, KT Corp (030200 KS) announced that it will cancel 5.1 million treasury shares (about 2% of outstanding shares), representing...

Douglas Kim

Positive outlook on KT Corp (030200 KS) due to aggressive capital return policy, Corporate Value Up, and higher Smartscore leading to strong stock...

Update on K Bank IPO: Likely in 1H 2025, potential positive impact on KT Corp as largest indirect shareholder, impressive financial growth in 1Q...