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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

The Korea Exchange (KRX) will announce the results of the December 2021 review of the <a href="https://www.smartkarma.com/entities/kosdaq-150-index" target="_blank" data-smartkarma-citation="entities:31077:1" rel="noopener">KOSDAQ 150 Index (KOSDQ150 INDEX)</a> in November. The constituent changes will be effective after the close of trading on 9 December.At the current time we see 12 potential changes to the index in December.The potential inclusions are <a href="https://www.smartkarma.com/entities/eubiologics-co-ltd" target="_blank" data-smartkarma-citation="entities:23739:1" rel="noopener">Eubiologics (206650 KS)</a>, <a href="https://www.smartkarma.com/entities/nanos-co-ltd" target="_blank" data-smartkarma-citation="entities:16796:1" rel="noopener">Nanos Co Ltd (151910 KS)</a>, <a href="https://www.smartkarma.com/entities/huons-co-ltd" target="_blank" data-smartkarma-citation="entities:16275:1" rel="noopener">Huons Co Ltd (084110 KS)</a>, <a href="https://www.smartkarma.com/entities/access-bio-inc-kdr" target="_blank" data-smartkarma-citation="entities:5729:1" rel="noopener">Access Bio Inc (950130 KS)</a>, Cellid (299660 KS), <a href="https://www.smartkarma.com/entities/kona-i-co-ltd" target="_blank" data-smartkarma-citation="entities:19695:1" rel="noopener">Kona I Co Ltd (052400 KS)</a>, <a href="https://www.smartkarma.com/entities/wonik-qnc-corp" target="_blank" data-smartkarma-citation="entities:6828:1" rel="noopener">Wonik Qnc Corp (074600 KS)</a>, <a href="https://www.smartkarma.com/entities/dk-d-i-co-ltd" target="_blank" data-smartkarma-citation="entities:9948:1" rel="noopener">Dk D&amp;I Co Ltd (033310 KS)</a>, <a href="https://www.smartkarma.com/entities/komico-ltd" target="_blank" data-smartkarma-citation="entities:24033:1" rel="noopener">KoMiCo Ltd. (183300 KS)</a>, PSK Inc (319660 KS), <a href="https://www.smartkarma.com/entities/aptc-co-ltd" target="_blank" data-smartkarma-citation="entities:27355:1" rel="noopener">APTC Co Ltd (089970 KS)</a> and <a href="https://www.smartkarma.com/entities/tk-chemical-corp" target="_blank" data-smartkarma-citation="entities:13428:1" rel="noopener">Tk Chemical (104480 KS)</a>.The potential deletions are <a href="https://www.smartkarma.com/entities/daea-ti-co-ltd" target="_blank" data-smartkarma-citation="entities:1473:1" rel="noopener">Daea Ti Co Ltd (045390 KS)</a>, <a href="https://www.smartkarma.com/entities/advanced-process-systems-corporation" target="_blank" data-smartkarma-citation="entities:24087:1" rel="noopener">Advanced Process Systems (265520 KS)</a>, <a href="https://www.smartkarma.com/entities/telcon-inc" target="_blank" data-smartkarma-citation="entities:15231:1" rel="noopener">Telcon Inc (200230 KS)</a>, <a href="https://www.smartkarma.com/entities/winix-inc" target="_blank" data-smartkarma-citation="entities:19972:1" rel="noopener">Winix Inc (044340 KS)</a>, <a href="https://www.smartkarma.com/entities/icure-pharm-inc" target="_blank" data-smartkarma-citation="entities:27142:1" rel="noopener">Icure Pharm Inc (175250 KS)</a>, <a href="https://www.smartkarma.com/entities/ubiquoss-inc" target="_blank" data-smartkarma-citation="entities:14341:1" rel="noopener">Ubiquoss Holding (078070 KS)</a>, <a href="https://www.smartkarma.com/entities/danawa-co-ltd" target="_blank" data-smartkarma-citation="entities:7191:1" rel="noopener">Danawa Co Ltd (119860 KS)</a>, <a href="https://www.smartkarma.com/entities/wisol-co-ltd" target="_blank" data-smartkarma-citation="entities:14463:1" rel="noopener">Wisol Co Ltd (122990 KS)</a>, <a href="https://www.smartkarma.com/entities/spigen-korea-co-ltd" target="_blank" data-smartkarma-citation="entities:9852:1" rel="noopener">Spigen Korea (192440 KS)</a>, <a href="https://www.smartkarma.com/entities/dongkuk-structures-constru" target="_blank" data-smartkarma-citation="entities:20412:1" rel="noopener">Dongkuk Structures &amp; Constru (100130 KS)</a>, <a href="https://www.smartkarma.com/entities/g-treebnt-co-ltd" target="_blank" data-smartkarma-citation="entities:1933:1" rel="noopener">G Treebnt (115450 KS)</a> and <a href="https://www.smartkarma.com/entities/lemon-co-ltd" target="_blank" data-smartkarma-citation="entities:28841:1" rel="noopener">Lemon Co Ltd (294140 KQ)</a>.There are a few potential inclusions that will have over 2 days of ADV to buy from passive funds, while the impact on the potential deletions is a lot higher.Short interest on the stocks is minimal though it has been increasing on a few of the potential deletions.

The Korea Exchange (KRX) will announce the results of the December 2021 review of the KOSDAQ 150 Index (KOSDQ150 INDEX) in November. The constituent changes will be effective after the close of trading on 9 December.At the current time we see 12 potential changes to the index in December.The potential inclusions are Eubiologics (206650 KS), Nanos Co Ltd (151910 KS), Huons Co Ltd (084110 KS), Access Bio Inc (950130 KS), Cellid (299660 KS), Kona I Co Ltd (052400 KS), Wonik Qnc Corp (074600 KS), Dk D&amp;I Co Ltd (033310 KS), KoMiCo Ltd. (183300 KS), PSK Inc (319660 KS), APTC Co Ltd (089970 KS) and Tk Chemical (104480 KS).The potential deletions are Daea Ti Co Ltd (045390 KS), Advanced Process Systems (265520 KS), Telcon Inc (200230 KS), Winix Inc (044340 KS), Icure Pharm Inc (175250 KS), Ubiquoss Holding (078070 KS), Danawa Co Ltd (119860 KS), Wisol Co Ltd (122990 KS), Spigen Korea (192440 KS), Dongkuk Structures &amp; Constru (100130 KS), G Treebnt (115450 KS) and Lemon Co Ltd (294140 KQ).There are a few potential inclusions that will have over 2 days of ADV to buy from passive funds, while the impact on the potential deletions is a lot higher.Short interest on the stocks is minimal though it has been increasing on a few of the potential deletions.

KOSDAQ150 Index Rebalance Preview: Lots of Changes Early in the Review Period

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

MSCI Emerging Markets Index / Technical Analysis

We are no longer recommending an overweight to China (MSCI China) due to recent RS deterioration. Our favorite countries remain Taiwan (TAIEX) and India (SENSEX), while Brazil (Bovespa) and South Korea (KOSPI) display improving price and RS trends -- add exposure. MSCI EM Technology and Materials are our top two Sector overweights. Additionally, the EM Health Care Sector shows bullish price and RS inflections, making it a timely Sector to add exposure to at current levels.

We are no longer recommending an overweight to China (MSCI China) due to recent RS deterioration. Our favorite countries remain Taiwan (TAIEX) and India (SENSEX), while Brazil (Bovespa) and South Korea (KOSPI) display improving price and RS trends -- add exposure. MSCI EM Technology and Materials are our top two Sector overweights. Additionally, the EM Health Care Sector shows bullish price and RS inflections, making it a timely Sector to add exposure to at current levels.

Overweight EM Vs. EAFE; Dollar Weakness Continues

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Thematic (Sector/Industry)

In this report, we provide a comprehensive list of 50 stocks (in the Korean stock market) that are affected the most by a prolonged conflict between the two countries.Of these 50 stocks, 35 of them are ones that would continue to be NEGATIVELY impacted by a prolonged trade conflict between Japan and South Korea and 15 of them would be POSITIVELY impacted by this trade conflict (We have included stocks with market cap of at least 300 billion won in this list).We have included 35 Korean stocks that are NEGATIVELY impacted from a prolonged trade war between Japan and South Korea. These stocks are down on average 6.7% from end of June to July 17th while KOSPI is down 2.7% during the same period. Of these 35 stocks, 11 of them including <a href="https://www.smartkarma.com/entities/hotel-shilla-co-ltd" target="_blank" data-smartkarma-citation="entities:107:1" rel="noopener">Hotel Shilla (008770 KS)</a>, <a href="https://www.smartkarma.com/entities/jin-air-co-ltd" target="_blank" data-smartkarma-citation="entities:26028:1" rel="noopener">Jin Air Co. Ltd (272450 KS)</a>, <a href="https://www.smartkarma.com/entities/lotte-chilsung-beverage-co" target="_blank" data-smartkarma-citation="entities:4843:1" rel="noopener">Lotte Chilsung Beverage Co (005300 KS),</a> and <a href="https://www.smartkarma.com/entities/jyp-entertainment-corp" target="_blank" data-smartkarma-citation="entities:17598:1" rel="noopener">Jyp Entertainment (035900 KS)</a> experienced more than 10% decline in their share prices during this period.We have also included 15 Korean stocks that are POSITIVELY impacted from a prolonged trade war between Japan and South Korea. These stocks are up on average 16.8% from end of June to July 17th. Of these 15 stocks, 6 of them including <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>, <a href="https://www.smartkarma.com/entities/soulbrain-co-ltd" target="_blank" data-smartkarma-citation="entities:16883:1" rel="noopener">Soulbrain (036830 KS)</a>, <a href="https://www.smartkarma.com/entities/dongjin-semichem-co-ltd" target="_blank" data-smartkarma-citation="entities:19607:1" rel="noopener">Dongjin Semichem (005290 KS)</a>, and <a href="https://www.smartkarma.com/entities/oci-materials-co-ltd" target="_blank" data-smartkarma-citation="entities:19390:1" rel="noopener">Sk Materials (036490 KS) </a>experienced more than 10% increase in their share prices during this period.

In this report, we provide a comprehensive list of 50 stocks (in the Korean stock market) that are affected the most by a prolonged conflict between the two countries.Of these 50 stocks, 35 of them are ones that would continue to be NEGATIVELY impacted by a prolonged trade conflict between Japan and South Korea and 15 of them would be POSITIVELY impacted by this trade conflict (We have included stocks with market cap of at least 300 billion won in this list).We have included 35 Korean stocks that are NEGATIVELY impacted from a prolonged trade war between Japan and South Korea. These stocks are down on average 6.7% from end of June to July 17th while KOSPI is down 2.7% during the same period. Of these 35 stocks, 11 of them including Hotel Shilla (008770 KS), Jin Air Co. Ltd (272450 KS), Lotte Chilsung Beverage Co (005300 KS), and Jyp Entertainment (035900 KS) experienced more than 10% decline in their share prices during this period.We have also included 15 Korean stocks that are POSITIVELY impacted from a prolonged trade war between Japan and South Korea. These stocks are up on average 16.8% from end of June to July 17th. Of these 15 stocks, 6 of them including Foosung Co Ltd (093370 KS), Soulbrain (036830 KS), Dongjin Semichem (005290 KS), and Sk Materials (036490 KS) experienced more than 10% increase in their share prices during this period.

A Comprehensive List of 50 Stocks Affected by a Prolonged Japan-South Korea Conflict

Korea / Special Sits, Pairs, Index Rebalancing, Clepsydra Capital

Sanghyun Park

Korea / Special Sits, Pairs, Index Rebalancing

<ul>
<li>
<a href="https://www.smartkarma.com/entities/26912" target="_blank" data-smartkarma-citation="entities:26912:1">Wonik IPS (240810 KS)</a> / Wonik Tera Semicon (123100 KS) merger got shareholder approval yesterday. Spread now stands at 4.28%. Spread peaked at 5.12% on Dec 12. Dividend-adjusted spread is 4.17%.</li>
<li>Tera Semicon is a bit of a concern. Its stock purchase price is 1.38% higher than current price. Worst case would be half of the minority shareholders claiming rights. Even if so, this would be less than ₩60bil. The company is liquid enough to absorb it.</li>
<li>Local institutional arb traders have been seen doing this trade, at least partly. I'd make this trade when spread widens to 5~6%. I expect it to get to this level very soon. </li>
</ul>



Wonik IPS (240810 KS) / Wonik Tera Semicon (123100 KS) merger got shareholder approval yesterday. Spread now stands at 4.28%. Spread peaked at 5.12% on Dec 12. Dividend-adjusted spread is 4.17%.
Tera Semicon is a bit of a concern. Its stock purchase price is 1.38% higher than current price. Worst case would be half of the minority shareholders claiming rights. Even if so, this would be less than ₩60bil. The company is liquid enough to absorb it.
Local institutional arb traders have been seen doing this trade, at least partly. I'd make this trade when spread widens to 5~6%. I expect it to get to this level very soon. 


Wonik Merger Swap: Div-Adjusted Yield Is Now at 4.17% - Cancellation Risk Is Slim

<ul>
<li>
<a href="https://www.smartkarma.com/entities/26912" target="_blank" data-smartkarma-citation="entities:26912:1">Wonik IPS (240810 KS)</a> announced on Oct 29 that it would merge with Wonik Tera Semicon (123100 KS) at a swap ratio of 0.7394724. Ceiling for stock purchase is set at ₩50bil for IPS and ₩30bil for Tera Semicon.</li>
<li>Currently, arb spread isn't really at a glamorous level. At the Nov 5 closing prices, arb spread is at 3.24%. As for stock purchase spread, IPS is currently giving a decent 6.88% while Tera Semicon is at 3.49%.</li>
<li>Wonik already attempted this merger in 2016, but they couldn't get an approval from Tera Semicon shareholders. This dynamic may lead to an interesting situation where we may have spread openings to attract arb traders who can help reduce the number of stock purchase rights exercised.</li>
</ul>



Wonik IPS (240810 KS) announced on Oct 29 that it would merge with Wonik Tera Semicon (123100 KS) at a swap ratio of 0.7394724. Ceiling for stock purchase is set at ₩50bil for IPS and ₩30bil for Tera Semicon.
Currently, arb spread isn't really at a glamorous level. At the Nov 5 closing prices, arb spread is at 3.24%. As for stock purchase spread, IPS is currently giving a decent 6.88% while Tera Semicon is at 3.49%.
Wonik already attempted this merger in 2016, but they couldn't get an approval from Tera Semicon shareholders. This dynamic may lead to an interesting situation where we may have spread openings to attract arb traders who can help reduce the number of stock purchase rights exercised.


Wonik Merger Stock Swap: Summary & Trading Opportunities

South Korea

Wonik QNC Corporation designs and produces quartz products.  The Company's products are used to protect semiconductor from impurities.  Wonik QNC also manufactures fine ceramics for liquid crystal display (LCD) and semiconductor process.

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Wonik QnC Corp (074600 KS)

KOSDAQ150 Index Rebalance Preview: Lots of Changes Early in the Review Period

A month into the review period for the KOSDAQ150 December rebalance, we can already see 12 potential changes. The potential inclusions should...

Brian Freitas

Overweight EM Vs. EAFE; Dollar Weakness Continues

Our favorite countries remain Taiwan (TAIEX) and India (SENSEX), while Brazil (Bovespa) and South Korea (KOSPI) display improving price and RS...

Vermilion Research

A Comprehensive List of 50 Stocks Affected by a Prolonged Japan-South Korea Conflict

In this report, we provide a comprehensive list of 50 stocks (in the Korean stock market) that are affected the most by a prolonged conflict...

Douglas Kim

Wonik Merger Swap: Div-Adjusted Yield Is Now at 4.17% - Cancellation Risk Is Slim

Wonik IPS (240810 KS) / Wonik Tera Semicon (123100 KS) merger got shareholder approval yesterday. Spread now stands at 4.28%. Spread peaked at...

Sanghyun Park

Wonik Merger Stock Swap: Summary & Trading Opportunities

Wonik IPS (240810 KS) announced on Oct 29 that it would merge with Wonik Tera Semicon (123100 KS) at a swap ratio of 0.7394724. Ceiling for stock...

Sanghyun Park

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