Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Index Rebalance

<p>The Korea Exchange (KRX) launched 5 indices last year following the New Deal initiative that the Government launched to digitalise social infrastructure and jumpstart the transition to green energy.</p><p>The KRX created 4 indices tracking the Secondary Battery, Biotech, Internet and Gaming sectors that are expected to benefit from the New Deal initiative plus an additional index (BBIG) that includes the top 3 stocks from each sector.</p><p>All indices have performed well since then. The KRX announced changes to the 5 indices late last week and the changes become effective post the close of trading on 25 February.</p><div><p><a href="https://www.smartkarma.com/entities/kakao-games-corp" target="_blank" data-smartkarma-citation="entities:26730:1" rel="noopener">Kakao Games Corp (293490 KS)</a> replaces <a href="https://www.smartkarma.com/entities/pearl-abyss-corp" target="_blank" data-smartkarma-citation="entities:24391:1" rel="noopener">Pearl Abyss (263750 KS)</a> in the BBIG Index.</p></div><div><p>In the Secondary Battery index, <a href="https://www.smartkarma.com/entities/soulbrain-co-ltd" target="_blank" data-smartkarma-citation="entities:16883:1" rel="noopener">Soulbrain (036830 KS)</a> and <a href="https://www.smartkarma.com/entities/l-f-co-ltd" target="_blank" data-smartkarma-citation="entities:14300:1" rel="noopener">L&amp;F Co Ltd (066970 KS)</a> replace <a href="https://www.smartkarma.com/entities/doosan-solus-co-ltd" target="_blank" data-smartkarma-citation="entities:28947:1" rel="noopener">Doosan Solus Co Ltd (336370 KS)</a> and <a href="https://www.smartkarma.com/entities/foosung-co-ltd" target="_blank" data-smartkarma-citation="entities:16811:1" rel="noopener">Foosung Co Ltd (093370 KS)</a>.</p></div><div><p>In the Biotech index, <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> and <a href="https://www.smartkarma.com/entities/green-cross-corp" target="_blank" data-smartkarma-citation="entities:2969:1" rel="noopener">Green Cross (006280 KS)</a> replace <a href="https://www.smartkarma.com/entities/alteogen-inc" target="_blank" data-smartkarma-citation="entities:15886:1" rel="noopener">Alteogen Inc (196170 KS)</a> and <a href="https://www.smartkarma.com/entities/hanmi-pharm-co-ltd" target="_blank" data-smartkarma-citation="entities:12476:1" rel="noopener">Hanmi Pharm (128940 KS)</a>.</p></div><div><p>In the Internet index, <a href="https://www.smartkarma.com/entities/ace-technologies-corp" target="_blank" data-smartkarma-citation="entities:7868:1" rel="noopener">Ace Technologies (088800 KS)</a> and <a href="https://www.smartkarma.com/entities/rsupport-co-ltd" target="_blank" data-smartkarma-citation="entities:14783:1" rel="noopener">Rsupport Co Ltd (131370 KS)</a> replace <a href="https://www.smartkarma.com/entities/kg-inicis-co-ltd" target="_blank" data-smartkarma-citation="entities:5234:1" rel="noopener">KG Inicis Co Ltd (035600 KS)</a> and <a href="https://www.smartkarma.com/entities/ubiquoss-inc" target="_blank" data-smartkarma-citation="entities:14341:1" rel="noopener">Ubiquoss Holding (078070 KS)</a>.</p></div><div><p>In the Gaming index, <a href="https://www.smartkarma.com/entities/kakao-games-corp" target="_blank" data-smartkarma-citation="entities:26730:1" rel="noopener">Kakao Games Corp (293490 KS)</a> and <a href="https://www.smartkarma.com/entities/neptune-company" target="_blank" data-smartkarma-citation="entities:28826:1" rel="noopener">Neptune Company (217270 KS)</a> replace <a href="https://www.smartkarma.com/entities/neowiz-games-corp" target="_blank" data-smartkarma-citation="entities:12425:1" rel="noopener">Neowiz Games (095660 KS)</a> and Golfzon (215000 KS).</p></div>

The Korea Exchange (KRX) launched 5 indices last year following the New Deal initiative that the Government launched to digitalise social infrastructure and jumpstart the transition to green energy.The KRX created 4 indices tracking the Secondary Battery, Biotech, Internet and Gaming sectors that are expected to benefit from the New Deal initiative plus an additional index (BBIG) that includes the top 3 stocks from each sector.All indices have performed well since then. The KRX announced changes to the 5 indices late last week and the changes become effective post the close of trading on 25 February.Kakao Games Corp (293490 KS) replaces Pearl Abyss (263750 KS) in the BBIG Index.In the Secondary Battery index, Soulbrain (036830 KS) and L&amp;F Co Ltd (066970 KS) replace Doosan Solus Co Ltd (336370 KS) and Foosung Co Ltd (093370 KS).In the Biotech index, Shinpoong Pharmaceutical (019170 KS) and Green Cross (006280 KS) replace Alteogen Inc (196170 KS) and Hanmi Pharm (128940 KS).In the Internet index, Ace Technologies (088800 KS) and Rsupport Co Ltd (131370 KS) replace KG Inicis Co Ltd (035600 KS) and Ubiquoss Holding (078070 KS).In the Gaming index, Kakao Games Corp (293490 KS) and Neptune Company (217270 KS) replace Neowiz Games (095660 KS) and Golfzon (215000 KS).

KRX BBIG K-NewDeal Index Rebalance: First Set of Changes Announced

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Cross Asset Strategy

<p>There have been a plethora of announcements in the past few days about the changes to the ownership of many Korean companies held by Korea National Pension Fund Service (NPS). In this insight, we provide the changes in NPS' stakes in 78 Korean companies in 4Q19. Among these 78 companies, NPS added stakes in 54 companies and reduced ownership in 24 companies. Because of NPS's overwhelming influence in impacting the Korean stock market, it makes sense to be aware of what it are buying and selling. </p><p>NPS added its position in <a href="https://www.smartkarma.com/entities/sk-hynix-inc" target="_blank" data-smartkarma-citation="entities:16955:1" rel="noopener">SK Hynix (000660 KS)</a>, <a href="https://www.smartkarma.com/entities/naver-corp" target="_blank" data-smartkarma-citation="entities:16029:1" rel="noopener">Naver Corp (035420 KS)</a>, <a href="https://www.smartkarma.com/entities/celltrion-inc" target="_blank" data-smartkarma-citation="entities:991:1" rel="noopener">Celltrion Inc (068270 KS)</a>, <a href="https://www.smartkarma.com/entities/sk-telecom" target="_blank" data-smartkarma-citation="entities:395:1" rel="noopener">SK Telecom (017670 KS)</a>, <a href="https://www.smartkarma.com/entities/kakao-corp" target="_blank" data-smartkarma-citation="entities:15002:1" rel="noopener">Kakao Corp (035720 KS)</a>, and <a href="https://www.smartkarma.com/entities/lotte-shopping-co" target="_blank" data-smartkarma-citation="entities:2338:1" rel="noopener">Lotte Shopping Co (023530 KS)</a> in 4Q19. NPS reduced its stakes in <a href="https://www.smartkarma.com/entities/sk-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:393:1" rel="noopener">SK Holdings (034730 KS)</a>, and <a href="https://www.smartkarma.com/entities/coway-co-ltd" target="_blank" data-smartkarma-citation="entities:3022:1" rel="noopener">Coway Co Ltd (021240 KS) </a>in 4Q19. </p>

There have been a plethora of announcements in the past few days about the changes to the ownership of many Korean companies held by Korea National Pension Fund Service (NPS). In this insight, we provide the changes in NPS' stakes in 78 Korean companies in 4Q19. Among these 78 companies, NPS added stakes in 54 companies and reduced ownership in 24 companies. Because of NPS's overwhelming influence in impacting the Korean stock market, it makes sense to be aware of what it are buying and selling. NPS added its position in SK Hynix (000660 KS), Naver Corp (035420 KS), Celltrion Inc (068270 KS), SK Telecom (017670 KS), Kakao Corp (035720 KS), and Lotte Shopping Co (023530 KS) in 4Q19. NPS reduced its stakes in SK Holdings (034730 KS), and Coway Co Ltd (021240 KS) in 4Q19. 

What Is Korea National Pension Fund Buying & Selling?

Thematic (Sector/Industry)

<p><strong>I visited the G-Star game exhibition in Busan last Thursday (November 14th), which is the largest game exhibition held annually in Korea.</strong> The G-Star game exhibition was held over four days from November 14th to 17th and there were 244,309 visitors to the exhibition this year, up 3.9% YoY.</p><p>One of the things that was very noticeable about the G-Star 2019 Expo was the increasing presence of Chinese game companies including Tencent (Supercell), Mihoyo, and IGG who took up very large sections of the exhibition. On the other hand, the two largest game companies in Korea including <a href="https://www.smartkarma.com/entities/ncsoft-corp" target="_blank" data-smartkarma-citation="entities:5169:1" rel="noopener">NCsoft Corp (036570 KS)</a> and <a href="https://www.smartkarma.com/entities/nexon-co-ltd" target="_blank" data-smartkarma-citation="entities:16032:1" rel="noopener">Nexon (3659 JP)</a> chose not to attend. </p><p>In this report, I highlight some of the key companies and their games that were featured at this exhibition. </p>

I visited the G-Star game exhibition in Busan last Thursday (November 14th), which is the largest game exhibition held annually in Korea. The G-Star game exhibition was held over four days from November 14th to 17th and there were 244,309 visitors to the exhibition this year, up 3.9% YoY.One of the things that was very noticeable about the G-Star 2019 Expo was the increasing presence of Chinese game companies including Tencent (Supercell), Mihoyo, and IGG who took up very large sections of the exhibition. On the other hand, the two largest game companies in Korea including NCsoft Corp (036570 KS) and Nexon (3659 JP) chose not to attend. In this report, I highlight some of the key companies and their games that were featured at this exhibition. 

Visit to the G-Star Game Exhibition in Busan

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<p>In this report, we review the major sectors' performance in the Korean stock market in 2018 and also provide our outlook for them in 2019. We divided the Korean stock market into 17 major sectors such as autos, internet, and utilities. Our top sector picks for 2019 include telecom, Internet/games, utilities, and technology (lithium-ion batteries). We also believe there will likely be select IPOs that could do well next year. Overall, we believe it will be prudent to maintain a defensive position in one's stock portfolio. </p>
<p>One of the positive surprises that could occur in 2019 could be some kind of resolution between the US-China trade war. Both Xi and Trump have significant incentives to make a truce and negotiate for a settlement. However, even if China and the US make a compromise settlement, we believe the overall positive impact could be temporary. The great concern is the fact that the excessive global debt driven economy may be getting closer to the last legs of the business cycle and as more global investors perceive a global recession ahead, they may accelerate the transition to more defensive portfolios. </p>
<p>The top five stocks we like in the Korean stock market in 2019 are <strong><a href="https://www.smartkarma.com/entities/395" target="_blank" data-smartkarma-citation="entities:395:1">SK Telecom (017670 KS)</a>, <a href="https://www.smartkarma.com/entities/5169" target="_blank" data-smartkarma-citation="entities:5169:1">NCsoft Corp (036570 KS)</a>, <a href="https://www.smartkarma.com/entities/503" target="_blank" data-smartkarma-citation="entities:503:1">Samsung Sdi (006400 KS)</a>, <a href="https://www.smartkarma.com/entities/6653" target="_blank" data-smartkarma-citation="entities:6653:1">LG Corp (003550 KS)</a>, </strong>and <strong><a href="https://www.smartkarma.com/entities/6735" target="_blank" data-smartkarma-citation="entities:6735:1">Ottogi Corporation (007310 KS)</a> .</strong></p>
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In this report, we review the major sectors' performance in the Korean stock market in 2018 and also provide our outlook for them in 2019. We divided the Korean stock market into 17 major sectors such as autos, internet, and utilities. Our top sector picks for 2019 include telecom, Internet/games, utilities, and technology (lithium-ion batteries). We also believe there will likely be select IPOs that could do well next year. Overall, we believe it will be prudent to maintain a defensive position in one's stock portfolio. 
One of the positive surprises that could occur in 2019 could be some kind of resolution between the US-China trade war. Both Xi and Trump have significant incentives to make a truce and negotiate for a settlement. However, even if China and the US make a compromise settlement, we believe the overall positive impact could be temporary. The great concern is the fact that the excessive global debt driven economy may be getting closer to the last legs of the business cycle and as more global investors perceive a global recession ahead, they may accelerate the transition to more defensive portfolios. 
The top five stocks we like in the Korean stock market in 2019 are SK Telecom (017670 KS), NCsoft Corp (036570 KS), Samsung Sdi (006400 KS), LG Corp (003550 KS), and Ottogi Corporation (007310 KS) .


Korean Stock Market Sectors 2018 Review & 2019 Outlook

Japan TMT Analyst

Pelham Smithers

Market Intel on Asian Tech with a Japan focus

Pelham Smithers Associates

Founded in 2009, Pelham Smithers Associates (PSA) provides market intelligence on Asian technology, focusing in particular on Japan. The industries covered by our team of specialists are: consumer electronics, telecomms, pharmaceuticals, internet, electronic parts and materials, automotive technology, retail and capital goods. 

Research is provided by the following:
Pelham Smithers: Macro, consumer electronics, telecoms & pharma
Joel Scheiman: Electronics materials / components
Julie Boote: Autos
Will Nestuk: Capital goods, machinery & transportation equipment parts
Thao Nguyen: eCommerce, internet content, marketing & advertising

Equity Bottom-Up

<p>2018 has been another excellent year for the nascent eSports market, with growth of around 35~40% from 2017. With some big end-of-year tournaments yet to come, the 2018 prize pool looks to be up 28~30% at US$148~150mil, while sponsorship has grown even more quickly. With two months left in 2018, it seems highly likely that Dota 2 will continue to be the largest eSport by prize money, but the rise in Fortnite from nowhere at the start of the year to 2nd place suggests that Dota 2 is likely to be dethroned in 2019. Fortnite, though, is primarily a US phenomenon and elsewhere games like PUBG and ShadowVerse may have more of an impact as eSports, reflecting regional tastes. Overall, though, those companies investing in eSports - be it in facilities, tournaments, teams and leagues - should get rewarded.</p>

2018 has been another excellent year for the nascent eSports market, with growth of around 35~40% from 2017. With some big end-of-year tournaments yet to come, the 2018 prize pool looks to be up 28~30% at US$148~150mil, while sponsorship has grown even more quickly. With two months left in 2018, it seems highly likely that Dota 2 will continue to be the largest eSport by prize money, but the rise in Fortnite from nowhere at the start of the year to 2nd place suggests that Dota 2 is likely to be dethroned in 2019. Fortnite, though, is primarily a US phenomenon and elsewhere games like PUBG and ShadowVerse may have more of an impact as eSports, reflecting regional tastes. Overall, though, those companies investing in eSports - be it in facilities, tournaments, teams and leagues - should get rewarded.

ESports - 2018 Provides a Great Platform for 2019

South Korea

Soop Co., Ltd. offers new media platform services. The Company provides digital media storage, streaming, downloading, video on demand, advertising services, and other services. Soop offers services in South Korea.

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Soop (067160 KS)

KRX BBIG K-NewDeal Index Rebalance: First Set of Changes Announced

The KRX has announced changes to the KRX New Deal indices that will be effective after the close of trading on 25 February. Pearl Abyss is...

Brian Freitas

What Is Korea National Pension Fund Buying & Selling?

There have been a plethora of announcements in the past few days about the changes to the ownership of many Korean companies held by Korea National...

Douglas Kim

Visit to the G-Star Game Exhibition in Busan

I visited the G-Star game exhibition in Busan last Thursday (November 14th), which is the largest game exhibition held annually in Korea. The...

Douglas Kim

Korean Stock Market Sectors 2018 Review & 2019 Outlook

In this report, we review the major sectors' performance in the Korean stock market in 2018 and also provide our outlook for them in 2019. We...

Douglas Kim

ESports - 2018 Provides a Great Platform for 2019

2018 has been another excellent year for the nascent eSports market, with growth of around 35~40% from 2017. With some big end-of-year tournaments...

Pelham Smithers Associates

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