In today’s briefing:
- Errors in Local Street’s Projections for the KOSPI 200 Rebalancing
- KOSPI200 Index Rebalance Preview: 7 Changes a Side for June
- A 100% Tariffs on Films Produced Outside the U.S. – Negative on Korean Film Production Companies
- Kolmar Korea: K-Beauty ODMs- Positioned to Ride US Demand Growth While Tiding Over Tariffs
- Initial Thoughts on the Musinsa IPO
Errors in Local Street’s Projections for the KOSPI 200 Rebalancing
- One local desk misread the KOSPI 200 rules, thinking one screen was enough — but it’s a strict two-step filter, and that led to three wrong delete calls.
- KRX will drop the rebalance list post-close on May 21 or 22, and despite well-telegraphed outcomes, strong next-day price action has followed in past cycles.
- Consider a pre-announcement long/short basket trade, as this is the first rebalance post-short-selling resumption. NXT’s rising market share also creates opportunities in overnight-daytime price spreads.
KOSPI200 Index Rebalance Preview: 7 Changes a Side for June
- With the review period complete, there could be 7 changes for the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) in June.
- The impact on the potential inclusions ranges from 1.6-22 days of ADV while the impact on the potential deletions varies from 3.6-16.5 days of ADV.
- Han Kuk Carbon (017960 KS) appeared as a forecast add in the week starting 22 March and the stock is up 38% since then.
A 100% Tariffs on Films Produced Outside the U.S. – Negative on Korean Film Production Companies
- The Trump administration proposed a new 100% tariffs at movies produced outside the United States. Korean contents account for about 8-9% of total viewing hours on Netflix globally.
- Top three listed film/drama production companies in Korea including Studio Dragon, CJ ENM, and ContentreeJoongAng are likely to be negatively impacted by the new major tariffs imposed by the U.S.
- Economics of making a movie is much cheaper in South Korea versus the U.S. Producing a film in South Korea can cost 30–70% less than in the United States.
Kolmar Korea: K-Beauty ODMs- Positioned to Ride US Demand Growth While Tiding Over Tariffs
- K-Beauty ODM segment appears positioned both to ride the secular growth of Korean skincare in the U.S. and to tide over tariff turbulence given their US based manufacturing facilities.
- By contrast to OEM/ODM players, major legacy consumer beauty brands like AmorePacific, LG Household & Health Care have been slower to localise production leaving them exposed to reciprocal tariffs.
- With American cosmetic imports from Korea hitting all-time highs, Korean ODMs with local facilities could see demand growth and profit recovery as clients onshore production to avoid tariffs.
Initial Thoughts on the Musinsa IPO
- Musinsa is getting ready to complete its IPO in 2H 2025. Musinsa is the top fashion online/mobile platform in Korea.
- The market value of Musinsa is expected to be about 5 trillion won which could be one of the largest IPOs in Korea this year.
- Musinsa had its best ever results in 2024 with sales of 1.2 trillion won (up 25.1% YoY), operating profit of 102.8 billion won, and net profit of 69.8 billion won.
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