In today’s briefing:
- Local Brokers Sound Off on 40% IPO Lock-Up—A Major Setup for Offshore Traders
- KOSPI200 Index Adhoc Rebalance: Kumyang (001570 KS)’s Designation Opens Up an Index Spot
- Kum Yang Gets Designated as an Administration Stock and To Be Deleted from KOSPI 200 Index
- Hanwha Systems: Expand 3rd Party Allocation Capital Increase Limit from 20% to 30% of Issued Shares
- Kospi Index Options Weekly (Feb 24 – 28): Decline Accelerates Through 350
Local Brokers Sound Off on 40% IPO Lock-Up—A Major Setup for Offshore Traders
- This 40% rule will distort bookbuilding, force down-pricing, choke float post-listing, and amplify volatility.
- Offshore investors like us benefit most—cheap IPO pricing with no lock-up. Local brokers see this as a giveaway to foreign funds and pushed back hard last Friday.
- FSS won’t budge—40% lock-up is happening. If issues arise post-implementation, they might adjust later.
KOSPI200 Index Adhoc Rebalance: Kumyang (001570 KS)’s Designation Opens Up an Index Spot
- Kum Yang (001570 KS)‘s designation as an Administrative Issue should result in the deletion of the stock from the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) later this week.
- Taekwang Industrial (003240 KS) could be added to the index as an ad hoc replacement. The stock was in line to be added to the index at the June rebalance.
- Miwon Specialty Chemical (268280 KS) ranked higher than Taekwang Industrial (003240 KS) at the December rebalance but appears to fail the liquidity screen.
Kum Yang Gets Designated as an Administration Stock and To Be Deleted from KOSPI 200 Index
- On 4 March, Korea Exchange announced that it will designate Kum Yang (001570 KS) as an administration stock, resulting in a deletion from KOSPI 200 index.
- These increased penalty points and fine are mainly from the company inflating the expected performance of a Mongolian mine which the company had plans to acquire shares.
- We continue to remain negative on Kum Yang. As a result of designation as an administration stock and deletion from KOSPI 200, investors will likely push down this stock further.
Hanwha Systems: Expand 3rd Party Allocation Capital Increase Limit from 20% to 30% of Issued Shares
- In the past week, Hanwha Systems announced that it plans to expand third party allocation capital increase limit from 20% to 30% of issued shares in its articles of incorporation.
- This plan to significantly increase the amount of capital raise limit sets the stage for a major capital increase by Hanwha Systems in 2025, in our view.
- Unlike in 2021 when we were bullish on Hanwha Systems post a large-scale capital raise, we are more cautious on the company’s potential new large scale capital raise this year.
Kospi Index Options Weekly (Feb 24 – 28): Decline Accelerates Through 350
- Kospi records one of its five largest declines of the past year on Friday.
- Volatility responded sharply to the accelerating selloff, closely tracking the market’s downward momentum.
- With the sharp decline and surge in implied volatility, hedging considerations are explored.
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