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

<ul>
<li>In the past week, there were numerous local news accounts about a rights offering of nearly 800 billion won by Kum Yang. This has not been confirmed by the company. </li>
<li>Although Kum Yang has not committed to a rights offering, there is a high probability of such capital raise in 4Q24 which is likely to dilute existing shareholders. </li>
<li>Kum Yang remains a highly speculative stock. The management has lost so much credibility in the past year. We would stay away from it as far as possible. </li>
</ul>


In the past week, there were numerous local news accounts about a rights offering of nearly 800 billion won by Kum Yang. This has not been confirmed by the company. 
Although Kum Yang has not committed to a rights offering, there is a high probability of such capital raise in 4Q24 which is likely to dilute existing shareholders. 
Kum Yang remains a highly speculative stock. The management has lost so much credibility in the past year. We would stay away from it as far as possible. 


Kum Yang: A Major Capital Raise Possible in 4Q24 Which Is Likely to Dilute Existing Shareholders

Equity Capital Markets

<ul>
<li>The arbitrage is clear: it's the difference between stock rights/subscription costs and short hedge price. Kumyang's high market interest and volatility amplify this, suggesting unusual trading angles.</li>
<li>Kumyang's futures also show extreme volatility, likely causing excessive backwardation around the ex-rights date and stock rights window, affecting futures-based short hedge positions.</li>
<li>This opens up the possibility that, depending on entry points, our futures-based short hedge position might temporarily enter an unusual profitable zone relative to the stock rights and subscription costs.</li>
</ul>


The arbitrage is clear: it's the difference between stock rights/subscription costs and short hedge price. Kumyang's high market interest and volatility amplify this, suggesting unusual trading angles.
Kumyang's futures also show extreme volatility, likely causing excessive backwardation around the ex-rights date and stock rights window, affecting futures-based short hedge positions.
This opens up the possibility that, depending on entry points, our futures-based short hedge position might temporarily enter an unusual profitable zone relative to the stock rights and subscription costs.


Finding Unusual Arbitrage Angles in Kumyang's Effectively Pre-Announced Capital Increase

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 Apr 26th which has an aggregated holding worth USD522.3bn.</li>
<li>We estimate that foreign flows to be inflows of USD843mln. 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 Ecopro, Hyundai Motor, Krafton, Sk Hynix, Samsung Electronics, Hanmi Semicon.</li>
</ul>


We analyzed the changes in foreign holdings of KRX Stocks as of Apr 26th which has an aggregated holding worth USD522.3bn.
We estimate that foreign flows to be inflows of USD843mln. 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 Ecopro, Hyundai Motor, Krafton, Sk Hynix, Samsung Electronics, Hanmi Semicon.


KRX Foreign Holding Weekly (Apr 26th): Ecopro, Hyundai Motor, Krafton, Sk Hynix, Samsung Electronics

<ul>
<li>On 28 March, the external auditor of Kum Yang (Samil PriceWaterhouseCoopers) raised warnings about the viability of Kum Yang as a going concern. </li>
<li>The auditor also mentioned increasing probability of Chairman Ryu of Kum Yang potentially selling a portion of his shares to raise further capital.</li>
<li>It is RARE for an auditor to raise concerns about a company's viability of the entity as a going concern. This is likely to negatively impact Kum Yang's share price. </li>
</ul>


On 28 March, the external auditor of Kum Yang (Samil PriceWaterhouseCoopers) raised warnings about the viability of Kum Yang as a going concern. 
The auditor also mentioned increasing probability of Chairman Ryu of Kum Yang potentially selling a portion of his shares to raise further capital.
It is RARE for an auditor to raise concerns about a company's viability of the entity as a going concern. This is likely to negatively impact Kum Yang's share price. 


Kum Yang: Auditor Raises Flags on Viability as a Going Concern + Chairman Ryu Could Sell Shares

South Korea

Kum Yang Co., Ltd. specializes in manufacturing blowing agents to foam rubber products and polymers.  The Company also produces other basic fine chemicals, such as sulphur products.

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Kum Yang (001570 KS)

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

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

Kum Yang: A Major Capital Raise Possible in 4Q24 Which Is Likely to Dilute Existing Shareholders

Kum Yang remains a highly speculative stock. The management has lost so much credibility in the past year. We would stay away from it as far as...

Douglas Kim

Finding Unusual Arbitrage Angles in Kumyang's Effectively Pre-Announced Capital Increase

This post explores the potential for unusual trading opportunities that go beyond typical levels in Kumyang's massive capital increase event, which...

Sanghyun Park

KRX Foreign Holding Weekly (Apr 26th): Ecopro, Hyundai Motor, Krafton, Sk Hynix, Samsung Electronics

We analyzed KRX foreign holding data for the past week and highlighted foreign holding changes in Ecopro, Hyundai Motor, Krafton, Sk Hynix, Samsung...

Ke Yan, CFA, FRM

Kum Yang: Auditor Raises Flags on Viability as a Going Concern + Chairman Ryu Could Sell Shares

After the market close on 3 April, Kum Yang reported that Chairman Ryu sold 4.55% of the company in a block deal at a price of 106,049 won (7.3%...

Douglas Kim

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