In today’s briefing:
- KOSDAQ150 Ad Hoc Index Rebalance: Hancom (030520) To Replace Vidente (121800)
- MSCI Korea Flow Trading for August 31st
- LX Semicon KOSDAQ→KOSPI Migration Event: Index Rebalance Trading
- A Full Walkthrough of What Happens to Vidente & Hancom: KOSDAQ 150 Special Change
- Orion Corp – Record Results in 2Q 2022 Bolstered By Strong Sales in China, Russia, & Vietnam
KOSDAQ150 Ad Hoc Index Rebalance: Hancom (030520) To Replace Vidente (121800)
- Vidente (121800 KS) has not submitted its semiannual reports and has been labeled as an ‘Administrative Issue’. This means deletion from the KOSDAQ 150 Index (KOSDQ150 INDEX) on 19 August.
- Hancom Inc (030520 KS) was the highest ranked stock to not be included in the index at the June rebalance. It will now be included in the index.
- Passive funds will need to buy KRW 8.8bn of Hancom Inc (030520 KS) while selling KRW 11.2bn of Vidente (121800 KS).
MSCI Korea Flow Trading for August 31st
- MSCI Korea’s August QIR features one deletion: SK Telecom. But Woori Financial, HYBE, and LG Energy will also present a notable impact as they face float rate changes.
- We should consider executing flow trading on these names, even SKT, towards the effective date as much as possible, as the flow magnitude wouldn’t be enough to act proactively.
- It’s been witnessed that SK Telecom’s recall and liquidation of short positions have been made preemptively this time, minimizing the risk of price distortion on the effective date.
LX Semicon KOSDAQ→KOSPI Migration Event: Index Rebalance Trading
- LX Semicon announced that its board approved KOSPI migration on August 17. This migration requires shareholder approval, and a shareholder meeting will be scheduled for September 23.
- The outflow of KOSDAQ 150 is estimated to be -1.37x ADTV. A passive impact of this magnitude should cause a price movement of at least 3%p.
- But LX Semicon’s GICS sector won’t change after the KOSPI migration. We should refrain from trading with expectations for the possibility of KOSPI 200 inclusion at this point.
A Full Walkthrough of What Happens to Vidente & Hancom: KOSDAQ 150 Special Change
- Vidente is a KOSDAQ 150 constituent. If designated as an administrative issue, it will be removed on the third trading day after the effective date of designation.
- Hancom gets to replace Vidente, and rebalancing trading occurs at the close of August 19th. Hancom’s passive inflow should be 4.70x ADTV.
- It seems that proactive long positions have already been built up significantly from today. So, we should consider getting out of the position earlier than usual towards Friday’s close.
Orion Corp – Record Results in 2Q 2022 Bolstered By Strong Sales in China, Russia, & Vietnam
- Despite unfavorable business environment such as global inflation, Orion was able to generate excellent progress in sales and profit growth in countries including China, Vietnam, and Russia in 2Q 2022.
- Orion had sales of 263.2 billion won (up 19.6% YoY) and operating profit of 35.7 billion won (up 170.3% YoY) in China.
- Due to a combination of attractive valuations and improving fundamentals along with restrictions of snacks imports from Taiwan to China, we continue to believe Orion’s shares could outperform the market.
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