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>Structurally, Square’s NAV trade still works. The Hynix stake alone implies a 60%+ discount, well above local norms, with policy tailwinds supporting long-term compression.</li>
<li>Near term, Square’s NAV is a derivative of retail Hynix flows. Today was the first real unwind since the 10th, with retail net selling roughly 5x yesterday’s retail net-sell.</li>
<li>Retail sold both, but Hynix again dominated the tape. Retail is range-trading ₩500ks, and that behavior is the key driver of Square’s short-term NAV inflection.</li>
</ul>


Structurally, Square’s NAV trade still works. The Hynix stake alone implies a 60%+ discount, well above local norms, with policy tailwinds supporting long-term compression.
Near term, Square’s NAV is a derivative of retail Hynix flows. Today was the first real unwind since the 10th, with retail net selling roughly 5x yesterday’s retail net-sell.
Retail sold both, but Hynix again dominated the tape. Retail is range-trading ₩500ks, and that behavior is the key driver of Square’s short-term NAV inflection.


Retail Range-Trading Hynix Is Driving Short-Term Inflection in Square NAV Trade

<ul>
<li>“Effective immediately” matters for L2 exit timing and re-flag risk; KRX confirmed year-end announcement with instant rollout, making year-end the key flow inflection if big L2 names get exempted.</li>
<li>Large caps (₩10tn+ market cap) pulled from market-warning universe, with L2 tagging now factoring relative outperformance, not just absolute price gains, to curb overuse.</li>
<li>Of 33 L2 names, five KOSPI blue chips see re-flag risk drop after their mandatory 10-day lockup; near-term trades focus on timing these expiries for relief rallies and flow resets.</li>
</ul>


“Effective immediately” matters for L2 exit timing and re-flag risk; KRX confirmed year-end announcement with instant rollout, making year-end the key flow inflection if big L2 names get exempted.
Large caps (₩10tn+ market cap) pulled from market-warning universe, with L2 tagging now factoring relative outperformance, not just absolute price gains, to curb overuse.
Of 33 L2 names, five KOSPI blue chips see re-flag risk drop after their mandatory 10-day lockup; near-term trades focus on timing these expiries for relief rallies and flow resets.


Fresh Intel Just in on KRX’s L2 Warning Revamp

<ul>
<li>SK Hynix and SK Square hit L2 flags; cash-only until Dec 24. Margin off, &gt;40% two-day rip triggers halt. L2 lifts if below T-5/+45%, T-15/+75%, and 15-day high.</li>
<li>L2’s usually a non-event, but this time the margin freeze probably smacks Hynix harder. Key trigger is staying below the 15-day high: Hynix ₩587,000, Square ₩324,000.</li>
<li>Govt set to roll out AI-semiconductor holdco deregulation this week, boosting AI holdcos like Square and juicing a near-term Square-over-Hynix trade opportunity.</li>
</ul>


SK Hynix and SK Square hit L2 flags; cash-only until Dec 24. Margin off, &gt;40% two-day rip triggers halt. L2 lifts if below T-5/+45%, T-15/+75%, and 15-day high.
L2’s usually a non-event, but this time the margin freeze probably smacks Hynix harder. Key trigger is staying below the 15-day high: Hynix ₩587,000, Square ₩324,000.
Govt set to roll out AI-semiconductor holdco deregulation this week, boosting AI holdcos like Square and juicing a near-term Square-over-Hynix trade opportunity.


Hynix & Square L2 Flags Set to Squeeze Spread Near Term

<ul>
<li>ADR odds are tiny. Both Samsung and Hynix have thin control stakes, making governance risk too high. Neither is willing to chase a valuation pop at the expense of stability.</li>
<li>Still can’t ignore it, since the ADR chatter is meaningfully swinging the pair trades. Samsung pref spread and Hynix/Square are both getting pushed around.</li>
<li>ADR noise cooled today, but it can easily resurface and skew the setup. Treat as noise, but be ready to hit aggressive reversion trades when it pops again.</li>
</ul>


ADR odds are tiny. Both Samsung and Hynix have thin control stakes, making governance risk too high. Neither is willing to chase a valuation pop at the expense of stability.
Still can’t ignore it, since the ADR chatter is meaningfully swinging the pair trades. Samsung pref spread and Hynix/Square are both getting pushed around.
ADR noise cooled today, but it can easily resurface and skew the setup. Treat as noise, but be ready to hit aggressive reversion trades when it pops again.


Read-Through on the Samsung/Hynix ADR-Listing Noise

<ul>
<li>If the three non-IT names exit IT, passive flows hit hard: SK Square/LG Electronics ~0.4× DTV out, LG Corp ~0.8× DTV out, new IT entrants ~0.2–0.25× DTV in.</li>
<li>If KRX surprises next Tuesday, kicking three names from IT, expect immediate tape reaction—market memory exists, but the scenario isn’t priced, unlike 2023 Kakaopay, so instant price impact is likely.</li>
<li>If this happens, June 11 turns into a chunky basket-flow day: SK Square (~15% weight) out, next-tier caps see ~0.15–0.2× DTV inflow, except ultra-liquid names like Hanmi Semi.</li>
</ul>


If the three non-IT names exit IT, passive flows hit hard: SK Square/LG Electronics ~0.4× DTV out, LG Corp ~0.8× DTV out, new IT entrants ~0.2–0.25× DTV in.
If KRX surprises next Tuesday, kicking three names from IT, expect immediate tape reaction—market memory exists, but the scenario isn’t priced, unlike 2023 Kakaopay, so instant price impact is likely.
If this happens, June 11 turns into a chunky basket-flow day: SK Square (~15% weight) out, next-tier caps see ~0.15–0.2× DTV inflow, except ultra-liquid names like Hanmi Semi.


Unexpected ETF-Driven Flow Event Lights up the KOSPI 200 IT Sleeve

South Korea

SK Square Co., Ltd. operates as an investment company. The Company invests in semiconductors, information and communications technologies, and other industries. SK Square conducts businesses in South Korea.

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SK Square (402340 KS)

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Hynix & Square L2 Flags Set to Squeeze Spread Near Term

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Unexpected ETF-Driven Flow Event Lights up the KOSPI 200 IT Sleeve

This post looks at the KOSPI 200 IT sector getting hit by a surprise passive-flow swing and what it could mean for upcoming rebalance trades.

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