Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Event-Driven

Posco International Corporation / Event-Driven

<ul>
<li>We discuss the end of the mandatory lock-up periods for 41 stocks in Korea in January 2024, among which 4 are in KOSPI and 37 are in KOSDAQ.</li>
<li>These 41 stocks on average could be subject to further selling pressures in January and could underperform relative to the market.</li>
<li>Among these 41 stocks, top five market cap stocks include Posco International, Doosan Robotics, Rainbow Robotics, Qualitas Semiconductor, and PhilEnergy.</li>
</ul>


We discuss the end of the mandatory lock-up periods for 41 stocks in Korea in January 2024, among which 4 are in KOSPI and 37 are in KOSDAQ.
These 41 stocks on average could be subject to further selling pressures in January and could underperform relative to the market.
Among these 41 stocks, top five market cap stocks include Posco International, Doosan Robotics, Rainbow Robotics, Qualitas Semiconductor, and PhilEnergy.


End of Mandatory Lock-Up Periods for 41 Companies in Korea in January 2024

Equity Bottom-Up

Posco International Corporation / Equity Bottom-Up

<ul>
<li>We believe that Warren Buffett's investments in Japanese trading companies have also positively impacted several Korean trading companies in the past three years. </li>
<li>We highlighted seven Korean trading companies three years ago including Posco International and their share prices are up more than 76% on average in this period. </li>
<li>Despite their outstanding share price performance in the past three years, there could be some significant headwinds ahead, as evidenced by the steep inverted yield curve.</li>
</ul>


We believe that Warren Buffett's investments in Japanese trading companies have also positively impacted several Korean trading companies in the past three years. 
We highlighted seven Korean trading companies three years ago including Posco International and their share prices are up more than 76% on average in this period. 
Despite their outstanding share price performance in the past three years, there could be some significant headwinds ahead, as evidenced by the steep inverted yield curve.


Warren Buffett's Investments in Japanese Trading Firms: Impact on Korean Trading Companies

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>Following the short sell ban announced on the weekend, the <a href="https://www.smartkarma.com/entities/korea-stock-exchange-kospi-200" target="_blank" data-smartkarma-citation="entities:26021:1" rel="noopener">KOSPI 200</a> and <a href="https://www.smartkarma.com/entities/kosdaq-150-index" target="_blank" data-smartkarma-citation="entities:31077:1" rel="noopener">KOSDAQ 150</a> opened higher on Monday and rallied through the day.</li>
<li>A lot of the intraday gains on Monday have been given up over the next two trading days. Surprisingly, KRX data indicates that not a lot of shorts have covered.</li>
<li>Foreigners have been net cash buyers since Monday (could indicate covering of offshore borrow) while retail were big sellers on Monday.</li>
</ul>


Following the short sell ban announced on the weekend, the KOSPI 200 and KOSDAQ 150 opened higher on Monday and rallied through the day.
A lot of the intraday gains on Monday have been given up over the next two trading days. Surprisingly, KRX data indicates that not a lot of shorts have covered.
Foreigners have been net cash buyers since Monday (could indicate covering of offshore borrow) while retail were big sellers on Monday.


Korea Short Sell Ban: Not a Lot Covered on Monday; Shorts Holding On?

Korea Stock Exchange KOSPI 200 / Event-Driven

<ul>
<li>Korea banned all short selling in March 2020 and resumed short selling only on <a href="https://www.smartkarma.com/entities/korea-stock-exchange-kospi-200" target="_blank" data-smartkarma-citation="entities:26021:1" rel="noopener">KOSPI 200</a> and <a href="https://www.smartkarma.com/entities/kosdaq-150-index" target="_blank" data-smartkarma-citation="entities:31077:1" rel="noopener">KOSDAQ 150</a> index constituents in May 2021.</li>
<li>News reports indicate that there could be another short sell ban as soon as the coming week. Indications are that the ban could last 6 months.</li>
<li>There are many implications of a total short sell ban including futures backwardation, market manipulation, and no emerging to developed market promotion.</li>
</ul>


Korea banned all short selling in March 2020 and resumed short selling only on KOSPI 200 and KOSDAQ 150 index constituents in May 2021.
News reports indicate that there could be another short sell ban as soon as the coming week. Indications are that the ban could last 6 months.
There are many implications of a total short sell ban including futures backwardation, market manipulation, and no emerging to developed market promotion.


Korea Short Sell Ban: Background, Manipulation, Holdings, Flows, Short Interest, Implications

Douglas Research Advisory

<ul>
<li>On 3 June, the shares of Korea Gas jumped limit up 30% to 38,700 won on huge volume (13.4 million), which was 37x higher than the previous day volume traded. </li>
<li>This was driven by the announcement of the South Korean President Yoon giving the approval to conduct exploratory drilling for potentially vast oil and gas prospects near Pohang. </li>
<li>The Korean government announced that there is a "very high" possibility the area contains as much as 14 billion barrels of oil and gas.</li>
</ul>


On 3 June, the shares of Korea Gas jumped limit up 30% to 38,700 won on huge volume (13.4 million), which was 37x higher than the previous day volume traded. 
This was driven by the announcement of the South Korean President Yoon giving the approval to conduct exploratory drilling for potentially vast oil and gas prospects near Pohang. 
The Korean government announced that there is a "very high" possibility the area contains as much as 14 billion barrels of oil and gas.


South Korea

Posco International Corporation is a general trading company.  The Company exports and imports steel, cement, crude oil, heavy machinery, automobile parts, and textiles.  Daewoo also manufactures synthetic fabrics for footwear, garments, and car seats, and operates a department store in Masan.

Posco International Corporation (047050 KS)

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Posco International Corporation (047050 KS)

End of Mandatory Lock-Up Periods for 41 Companies in Korea in January 2024

We discuss the end of the mandatory lock-up periods for 41 stocks in Korea in January 2024, among which 4 are in KOSPI and 37 are in KOSDAQ.

Douglas Kim

Warren Buffett's Investments in Japanese Trading Firms: Impact on Korean Trading Companies

We believe that Warren Buffett's investments in Japanese trading companies have also positively impacted several Korean trading companies in the...

Douglas Kim

Korea Short Sell Ban: Not a Lot Covered on Monday; Shorts Holding On?

Not a lot of shorts were covered on Monday. There could be more covering in the near term as the market drifts lower. KOSPI200 underperformed...

Brian Freitas

Korea Short Sell Ban: Background, Manipulation, Holdings, Flows, Short Interest, Implications

Media reports indicate that there could be a temporary short sell ban in Korea. This could lead to futures backwardation, market manipulation and a...

Brian Freitas

Korea Gas Corp: Drill Baby Drill

KOGAS shares jumped 30% driven by the announcement of the South Korean President Yoon giving the approval to conduct exploratory drilling for...

Douglas Kim

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