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>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

Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX EQUITY)

<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

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Douglas Research Advisory

Cross Asset Strategy

<ul>
<li>On 28 November, the Korean National Assembly reached an agreement on a tax reform plan to officially lower taxes on dividends income. </li>
<li>The decline in tax on dividends is a definite step in the right direction. Nonetheless, the top bracket dividend tax rate cut was slightly less than what market was expecting. </li>
<li>Given that about 15%-25% dividend tax rates are more common in other developed countries,  Korea's reduction of dividend taxes is likely to be welcomed highly by many global investors.</li>
</ul>


On 28 November, the Korean National Assembly reached an agreement on a tax reform plan to officially lower taxes on dividends income. 
The decline in tax on dividends is a definite step in the right direction. Nonetheless, the top bracket dividend tax rate cut was slightly less than what market was expecting. 
Given that about 15%-25% dividend tax rates are more common in other developed countries,  Korea's reduction of dividend taxes is likely to be welcomed highly by many global investors.


Top Bracket Dividend Tax Rate Lowered to 30% in Korea [Moderately Positive]

<ul>
<li>Democratic Party lawmaker Kim Hyun-jung has introduced a revised Income Tax Act that would lower the top tax rate on dividend income from 35% to 25%.</li>
<li>Given that this proposal is coming from the ruling Democratic Party, there is a fairly high probability that this could be passed into law in 3Q 2025.</li>
<li>We provide a list of 28 mid-cap/large cap stocks in Korea with more than 35% dividend payout and 3% or more dividend yield that could benefit from this new proposal.</li>
</ul>


Democratic Party lawmaker Kim Hyun-jung has introduced a revised Income Tax Act that would lower the top tax rate on dividend income from 35% to 25%.
Given that this proposal is coming from the ruling Democratic Party, there is a fairly high probability that this could be passed into law in 3Q 2025.
We provide a list of 28 mid-cap/large cap stocks in Korea with more than 35% dividend payout and 3% or more dividend yield that could benefit from this new proposal.


Separate Dividend Tax Plan in Korea: A Push for a 25% Rate for Top Bracket

<ul>
<li>In this insight, we discuss how Buffett's increased stakes in Japanese trading companies could positively impact Korean trading companies.</li>
<li>In addition, we look back at the past five years and compare how the major Korean trading companies have performed relative to their Japanese counterparts. </li>
<li>In Korea, we believe that the following 5 major Korean trading companies (POSCO International, Hanwha Corp, LX International, Samsung Corp, and Hyundai Corp) could continue to outperform the market.</li>
</ul>


In this insight, we discuss how Buffett's increased stakes in Japanese trading companies could positively impact Korean trading companies.
In addition, we look back at the past five years and compare how the major Korean trading companies have performed relative to their Japanese counterparts. 
In Korea, we believe that the following 5 major Korean trading companies (POSCO International, Hanwha Corp, LX International, Samsung Corp, and Hyundai Corp) could continue to outperform the market.


Warren Buffett's Increased Stakes in Japanese Trading Houses - Impact on Korean Trading Companies

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)

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

Top Bracket Dividend Tax Rate Lowered to 30% in Korea [Moderately Positive]

On 28 November, the Korean National Assembly reached an agreement on a tax reform plan to officially lower taxes on dividends income.

Douglas Kim

Separate Dividend Tax Plan in Korea: A Push for a 25% Rate for Top Bracket

The final decision to lower top bracket dividend tax from 35% to 25% could be made in the next several days. There have been increasing local news...

Douglas Kim

Warren Buffett's Increased Stakes in Japanese Trading Houses - Impact on Korean Trading Companies

In this insight, we discuss how Buffett's increased stakes in Japanese trading companies could positively impact Korean trading companies.

Douglas Kim

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)