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 TIGER Tour Leisure ETF shows the fastest AUM growth among the local themed ETFs in Korea. It seems clear that this is due to the reopening expectations.</li>
<li>The absolute size of AUM seems small. But the number of components is only 19, and most of them are small caps. So the actual passive impact is not small.</li>
<li>Another noteworthy aspect is that the rebalancing is pretty straightforward. It primarily relies on the float-adjusted market caps. So, the rebalancing estimation visibility is relatively high.</li>
</ul>


The TIGER Tour Leisure ETF shows the fastest AUM growth among the local themed ETFs in Korea. It seems clear that this is due to the reopening expectations.
The absolute size of AUM seems small. But the number of components is only 19, and most of them are small caps. So the actual passive impact is not small.
Another noteworthy aspect is that the rebalancing is pretty straightforward. It primarily relies on the float-adjusted market caps. So, the rebalancing estimation visibility is relatively high.


TIGER WISE Tour Leisure ETF Rebalancing Preview

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

In this insight, we discuss the top 10 most heavily shorted stocks in KOSPI (amount shorted/market cap). There has been some sharp increase in the shorting levels of these stocks in Korea in recent weeks and these heavily shorted stocks have accelerated their underperformance relative to the KOSPI. Given the increased market volatility in the past three months, it makes sense to pay more attention to the heavily shorted stocks in Korea as more institutions (especially local ones) have been shorting these stocks. Local institutions driving higher shorts in KOSPI in September - It has been noted that the local institutions accounted for 34% of total shorts trading volumes in KOSPI (as of 30 September), which is up significantly from 16.6% on 30 August. The local institutions' shorting amount increased from 60 billion won at the end of August to 180 billion won on 30 September. The top 10 most heavily shorted stocks in Korea are down on average 12.6% in the past three months, which is nearly double the underperformance of KOSPI which is down 6.9% in this period. Among these top 10 most shorted stocks, <a href="https://www.smartkarma.com/entities/shinpoong-pharmaceutical-co-ltd" target="_blank" data-smartkarma-citation="entities:7296:1" rel="noopener">Shinpoong Pharmaceutical (019170 KS)</a>, <a href="https://www.smartkarma.com/entities/hmm-co-ltd" target="_blank" data-smartkarma-citation="entities:13494:1" rel="noopener">HMM Co., Ltd. (011200 KS)</a>, and <a href="https://www.smartkarma.com/entities/lg-display-co-ltd" target="_blank" data-smartkarma-citation="entities:7145:1" rel="noopener">LG Display (034220 KS)</a> have been the worst performing stocks in this period.

In this insight, we discuss the top 10 most heavily shorted stocks in KOSPI (amount shorted/market cap). There has been some sharp increase in the shorting levels of these stocks in Korea in recent weeks and these heavily shorted stocks have accelerated their underperformance relative to the KOSPI. Given the increased market volatility in the past three months, it makes sense to pay more attention to the heavily shorted stocks in Korea as more institutions (especially local ones) have been shorting these stocks. Local institutions driving higher shorts in KOSPI in September - It has been noted that the local institutions accounted for 34% of total shorts trading volumes in KOSPI (as of 30 September), which is up significantly from 16.6% on 30 August. The local institutions' shorting amount increased from 60 billion won at the end of August to 180 billion won on 30 September. The top 10 most heavily shorted stocks in Korea are down on average 12.6% in the past three months, which is nearly double the underperformance of KOSPI which is down 6.9% in this period. Among these top 10 most shorted stocks, Shinpoong Pharmaceutical (019170 KS), HMM Co., Ltd. (011200 KS), and LG Display (034220 KS) have been the worst performing stocks in this period.

Local Institutions Drive Higher Shorts in KOSPI

Lotte Tour Development Co, Ltd. / Equity Bottom-Up

The sharp government crackdown on the Macau casinos is a boon on the Korean casinos. Because the government crackdown on the Macau casinos could last longer (next 6-12 months, for example), we believe that this is likely to lead to benefit the major casino operators of other major Asian countries such as in Korea, including companies such as Paradise and Lotte Tour Development. At this point, the great unknown regarding the Macau casino industry is how aggressively the Chinese government will try to impose on how the major casinos in Macau operate. We highlighted four major factors that the CCP could aggressively intrude on them including dividends, BOD representation, ownership, and expansion of non-casino businesses. Although there have been some increased regulatory scrutiny by the CCP on the Macau casinos in the past, this new crackdown in the past two weeks is probably one of the most restrictive and problematic ever. What is different this time around is timing. Unlike the previous crackdowns, this crackdown has involved not just the gambling sector but also other major sectors including education, technology, and entertainment.<ul>
<li>At its core, it deals with the fundamental issue of capitalism vs. communism, the details of which is beyond this article.</li>
<li>For the investor that actively trade the Asian casinos, it is very difficult to "buy the dip" since if indeed the CCP becomes major shareholders of these Macau casinos (including BOD representation), these companies would not be acting in the best interests of their shareholders and would not be maximizing their capital efficiency.</li>
<li>Rather, they would take directives from the CCP and minority shareholders would be screwed. </li>
</ul>

The sharp government crackdown on the Macau casinos is a boon on the Korean casinos. Because the government crackdown on the Macau casinos could last longer (next 6-12 months, for example), we believe that this is likely to lead to benefit the major casino operators of other major Asian countries such as in Korea, including companies such as Paradise and Lotte Tour Development. At this point, the great unknown regarding the Macau casino industry is how aggressively the Chinese government will try to impose on how the major casinos in Macau operate. We highlighted four major factors that the CCP could aggressively intrude on them including dividends, BOD representation, ownership, and expansion of non-casino businesses. Although there have been some increased regulatory scrutiny by the CCP on the Macau casinos in the past, this new crackdown in the past two weeks is probably one of the most restrictive and problematic ever. What is different this time around is timing. Unlike the previous crackdowns, this crackdown has involved not just the gambling sector but also other major sectors including education, technology, and entertainment.
At its core, it deals with the fundamental issue of capitalism vs. communism, the details of which is beyond this article.
For the investor that actively trade the Asian casinos, it is very difficult to "buy the dip" since if indeed the CCP becomes major shareholders of these Macau casinos (including BOD representation), these companies would not be acting in the best interests of their shareholders and would not be maximizing their capital efficiency.
Rather, they would take directives from the CCP and minority shareholders would be screwed. 


A Crackdown on the Macau Casinos Is a Boon on the Korean Casinos

<div class="content-highlight">
The "K-Stop movement" made its first real move on <a href="https://www.smartkarma.com/entities/hlb-inc" target="_blank" data-smartkarma-citation="entities:16969:1" rel="noopener">HLB Inc (028300 KS) </a>on July 15th. The K-Stop movement refers to "Korean Game Stop movement," where many Korean retail investors have gathered together to actively protest and trade against the institutional investors that have put short positions on various Korean stocks. There are lots of interesting developments with the K-Stop movement so we will update on these key issues in this insight. 
Korea Stock Investors Association (한국주식투자자연합회) (KSIA) is the main sponsoring entity of this K-Stop Movement. On 1 August,<a href="https://www.news1.kr/articles/?4388150" target="_blank" rel="noopener"> KSIA</a> mentioned that it will once again pool the resources of the retail investors to target a specific company to buy on August 10th. The date was originally scheduled on August 15th but they decided to use August 10th instead due to the latter date being on a Sunday. 
</div><ul>
<li>In KOSDAQ, the top two potential stocks that KSIA may target on August 10th include <a href="https://www.smartkarma.com/entities/kmw-co-ltd" target="_blank" data-smartkarma-citation="entities:2834:1" rel="noopener">KMW Co Ltd (032500 KS)</a> and <a href="https://www.smartkarma.com/entities/seegene-inc" target="_blank" data-smartkarma-citation="entities:11483:1" rel="noopener">Seegene Inc (096530 KS)</a>. </li>
<li>In KOSPI, the top three potential stocks that KSIA may target on August 10th include <a href="https://www.smartkarma.com/entities/lotte-tour-development-co-ltd" target="_blank" data-smartkarma-citation="entities:5526:1" rel="noopener">Lotte Tour Development Co, Ltd. (032350 KS)</a>, <a href="https://www.smartkarma.com/entities/lg-display-co-ltd" target="_blank" data-smartkarma-citation="entities:7145:1" rel="noopener">LG Display (034220 KS)</a>, and <a href="https://www.smartkarma.com/entities/shinpoong-pharmaceutical-co-ltd" target="_blank" data-smartkarma-citation="entities:7296:1" rel="noopener">Shinpoong Pharmaceutical (019170 KS)</a>.</li>
</ul>


The "K-Stop movement" made its first real move on HLB Inc (028300 KS) on July 15th. The K-Stop movement refers to "Korean Game Stop movement," where many Korean retail investors have gathered together to actively protest and trade against the institutional investors that have put short positions on various Korean stocks. There are lots of interesting developments with the K-Stop movement so we will update on these key issues in this insight. 
Korea Stock Investors Association (한국주식투자자연합회) (KSIA) is the main sponsoring entity of this K-Stop Movement. On 1 August, KSIA mentioned that it will once again pool the resources of the retail investors to target a specific company to buy on August 10th. The date was originally scheduled on August 15th but they decided to use August 10th instead due to the latter date being on a Sunday. 

In KOSDAQ, the top two potential stocks that KSIA may target on August 10th include KMW Co Ltd (032500 KS) and Seegene Inc (096530 KS). 
In KOSPI, the top three potential stocks that KSIA may target on August 10th include Lotte Tour Development Co, Ltd. (032350 KS), LG Display (034220 KS), and Shinpoong Pharmaceutical (019170 KS).


K-Stop Movement: Round 2 on August 10th - What Are the Targets?

In this insight, we discuss the top 50 most shorted stocks in KOSPI and KOSDAQ, respectively in terms of Short Sale Volume/Free Float Volume, respectively. The KRX provides updated short sale data in terms of short sale volume amount/market cap. However, it does not provide the data in terms of free float basis which is probably a better figure to use when analyzing the short sale data. We divided the tables for the KOSPI and KOSDAQ short sale volume into two parts. <ul>
<li>First, the 50 stocks are ranked in order of the short sale volume/free float volume ratio.</li>
<li>Second, because many institutional investors deal with larger market cap companies, we included only those companies with more than 1 trillion won in market cap. We also included data on the changes in the foreign ownership YTD. </li>
</ul>

In this insight, we discuss the top 50 most shorted stocks in KOSPI and KOSDAQ, respectively in terms of Short Sale Volume/Free Float Volume, respectively. The KRX provides updated short sale data in terms of short sale volume amount/market cap. However, it does not provide the data in terms of free float basis which is probably a better figure to use when analyzing the short sale data. We divided the tables for the KOSPI and KOSDAQ short sale volume into two parts. 
First, the 50 stocks are ranked in order of the short sale volume/free float volume ratio.
Second, because many institutional investors deal with larger market cap companies, we included only those companies with more than 1 trillion won in market cap. We also included data on the changes in the foreign ownership YTD. 


Top 50 Most Shorted Stocks in KOSPI & KOSDAQ (Short Sale Vol/Free Float Vol)

South Korea

Lotte Tour Development Co., Ltd. provides various tour package service. The Company franchises travel agencies, offers home-based travel businesses, and provides leisure-travel information.  The Company also engages in property development and building management and operates duty-free shop business.

Lotte Tour Development Co, Ltd. (032350 KS)

Price Gauge
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Lotte Tour Development Co, Ltd. (032350 KS)

TIGER WISE Tour Leisure ETF Rebalancing Preview

TIGER Tour Leisure ETF's passive impact should be of a meaningful level given its AUM size. So, we need to consider a long/short setup as a basket...

Sanghyun Park

Local Institutions Drive Higher Shorts in KOSPI

In this insight, we discuss the top 10 most heavily shorted stocks in KOSPI (amount shorted/market cap).These heavily shorted stocks have...

Douglas Kim

A Crackdown on the Macau Casinos Is a Boon on the Korean Casinos

The sharp government crackdown on the Macau casinos is a boon on the Korean casinos. Because the government crackdown on the Macau casinos could...

Douglas Kim

K-Stop Movement: Round 2 on August 10th - What Are the Targets?

On 1 August, Korea Stock Investors Association mentioned that it will once again pool the resources of the retail investors to target a specific...

Douglas Kim

Top 50 Most Shorted Stocks in KOSPI & KOSDAQ (Short Sale Vol/Free Float Vol)

In this insight, we discuss the top 50 most shorted stocks in KOSPI and KOSDAQ, respectively in terms of Short Sale Volume/Free Float Volume,...

Douglas Kim

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)