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>Street chatter says part of Square’s Hynix stake may convert via EB-ADR early, triggering local buybacks and front loading US passive inflows post-ADR listing.</li>
<li>EB-ADR setup likely decouples Hynix and Square short term. Hynix flow spikes, Square monetizes stake, holding company discount may reprice, but outperformance depends on capital deployment.</li>
<li>Watch local Hynix shares for delta-driven volatility from EB-ADR flows. Heavy shorting and post-listing pops could create sharp swings, making this a key trading opportunity.</li>
</ul>


Street chatter says part of Square’s Hynix stake may convert via EB-ADR early, triggering local buybacks and front loading US passive inflows post-ADR listing.
EB-ADR setup likely decouples Hynix and Square short term. Hynix flow spikes, Square monetizes stake, holding company discount may reprice, but outperformance depends on capital deployment.
Watch local Hynix shares for delta-driven volatility from EB-ADR flows. Heavy shorting and post-listing pops could create sharp swings, making this a key trading opportunity.


Why Hynix ADR Proceeds Could Be Used for Cancellations: Square’s EB-ADR Push

<ul>
<li>Hynix’s ADR primary issuance maxes at 19.52M shares (2.745% of SO), a hard cap with no room for SK to push beyond.</li>
<li>Structurally, Square is set to underperform. Hynix’s only lever is an early buyback, sizing and valuation are being calibrated, with ADR issuance now approached more flexibly than a month ago.</li>
<li>Early buyback could drive Square Hynix dynamics. Local chatter on using ADR proceeds to retire shares looks like noise. Focus is on early buyback from listing to boost ADR volume.</li>
</ul>


Hynix’s ADR primary issuance maxes at 19.52M shares (2.745% of SO), a hard cap with no room for SK to push beyond.
Structurally, Square is set to underperform. Hynix’s only lever is an early buyback, sizing and valuation are being calibrated, with ADR issuance now approached more flexibly than a month ago.
Early buyback could drive Square Hynix dynamics. Local chatter on using ADR proceeds to retire shares looks like noise. Focus is on early buyback from listing to boost ADR volume.


Likely Setup for Hynix ADR and Square-Hynix Trade Dynamics

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 analysed the earning revision of component stocks of MS-South Korea in the past month.</li>
<li>We tabulated stocks with the top impact on index's EPS, stocks' EPS revision, and revenue revision.</li>
<li>We highlighted EPS revision on SK Hynix, SKSQUARE, Hyundai Motor, Samsung Electronics, SAMSUNG EPIS, Samsung Elec (PREF).</li>
</ul>


We analysed the earning revision of component stocks of MS-South Korea in the past month.
We tabulated stocks with the top impact on index's EPS, stocks' EPS revision, and revenue revision.
We highlighted EPS revision on SK Hynix, SKSQUARE, Hyundai Motor, Samsung Electronics, SAMSUNG EPIS, Samsung Elec (PREF).


MS-South Korea Index Earning Revision (Mar): SK Hynix, SKSQUARE, Hyundai Motor, Samsung Electronics

<ul>
<li>We analyzed the changes in foreign holdings of KRX stocks as of Mar 27th. The aggregated holding was USD1,119.8bn.</li>
<li>We estimate that foreign flows to be outflows of USD7,992mln. 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 changes of foreign holdings in Samsung Electronics, SK Hynix, Hyundai Motor, Samsung Elec (PREF), SamsungE&amp;A.</li>
</ul>


We analyzed the changes in foreign holdings of KRX stocks as of Mar 27th. The aggregated holding was USD1,119.8bn.
We estimate that foreign flows to be outflows of USD7,992mln. We tabulate the league table for top changes by value for 1W/4W/1Y and top stocks held by foreign institutions.
We highlight changes of foreign holdings in Samsung Electronics, SK Hynix, Hyundai Motor, Samsung Elec (PREF), SamsungE&amp;A.


KRX Foreign Holding Weekly (Mar 27th): Samsung Electronics, SK Hynix, Hyundai Motor

<ul>
<li>Tomorrow’s AGM is crucial for legal and procedural legitimacy, as third-party ADR allocations require clear Articles approval to limit preemptive rights and shield the board under the revised Commercial Act.</li>
<li>With 2.1% of SO canceled and Square’s stake at 20.5%, issuing 2% new shares preserves the 20% threshold and maximizes capital inflows amid lower government CAPEX support.</li>
<li>Hynix’s remaining 3.1% treasury is mostly EB-collateralized, so securing an additional 3% for ADR will likely require staged buybacks, with treasury use and legal approval addressed in tomorrow’s Articles amendment.</li>
</ul>


Tomorrow’s AGM is crucial for legal and procedural legitimacy, as third-party ADR allocations require clear Articles approval to limit preemptive rights and shield the board under the revised Commercial Act.
With 2.1% of SO canceled and Square’s stake at 20.5%, issuing 2% new shares preserves the 20% threshold and maximizes capital inflows amid lower government CAPEX support.
Hynix’s remaining 3.1% treasury is mostly EB-collateralized, so securing an additional 3% for ADR will likely require staged buybacks, with treasury use and legal approval addressed in tomorrow’s Articles amendment.


Backstory on Hynix’s ADR Issuance Structure: Staged Buyback Still Needed for Additional 3%

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)

Why Hynix ADR Proceeds Could Be Used for Cancellations: Square’s EB-ADR Push

This post explains why the local street keeps talking about using Hynix ADR proceeds for cancellations: SK Square is pushing its Hynix stake...

Sanghyun Park

Likely Setup for Hynix ADR and Square-Hynix Trade Dynamics

This post breaks down the likely setup for the Hynix ADR and dives into the resulting Square Hynix trade dynamics and positioning implications

Sanghyun Park

MS-South Korea Index Earning Revision (Mar): SK Hynix, SKSQUARE, Hyundai Motor, Samsung Electronics

We analyzed MS-South Korea's consensus for Mar 2026 and highlighted changes of EPS in SK Hynix, SKSQUARE, Hyundai Motor, Samsung Electronics,...

Ke Yan, CFA, FRM

KRX Foreign Holding Weekly (Mar 27th): Samsung Electronics, SK Hynix, Hyundai Motor

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

Ke Yan, CFA, FRM

Backstory on Hynix’s ADR Issuance Structure: Staged Buyback Still Needed for Additional 3%

This post provides the backstory on Hynix’s ADR issuance structure, highlighting that a staged buyback is still required to secure the additional ~3%.

Sanghyun Park

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