In today’s briefing:
- EQD | Kospi Index Options Weekly – December 16 – 20
- LG CNS IPO: Limited Float Pushes Back Passive Buying
- Korea Zinc: Cumulative Voting System and 10 to 1 Stock Split
- Behind the Scenes of KRX Value-Up Index Special Rebalancing: What It Means for Flow Dynamics
- New Corporate Value Up Plans of POSCO Holdings and POSCO International
EQD | Kospi Index Options Weekly – December 16 – 20
- Kospi is now off 20% from its 52-week highs. Historic vols are picking up and implieds looking like good value given market dynamics.
- Hedging increased with broad based positioning in Puts across out-of-the-money strikes.
- Heavier volume in Puts with 53.2% of added open interest being Puts.
LG CNS IPO: Limited Float Pushes Back Passive Buying
- LG CNS (LGCNSZ KS) is looking to raise up to KRW 1,199bn (US$830m), valuing the company at KRW 6 trillion (US$4.15bn) at the top end of the IPO price range.
- As a member of the IT sector, inclusion in the KOSPI200 Index will only take place via Fast Entry (near impossible) or as a large-scale company.
- Inclusion in global indices could commence in September 2025 and will be easier if the identity of the pre-IPO minority shareholders is disclosed or if the strategic investors sell.
Korea Zinc: Cumulative Voting System and 10 to 1 Stock Split
- Chairman Choi has proposed a cumulative voting system which is one of the agenda items to be discussed and voted upon at the EGM on 23 January.
- There is likely to be continued uncertainty about proxy voting, including whether or not Korea Zinc could use cumulative voting system for Chairman Choi to retain control of the company.
- On 23 December, Korea Zinc (010130 KS) announced that it will propose a 10 to 1 stock split on the next EGM scheduled for 23 January 2025.
Behind the Scenes of KRX Value-Up Index Special Rebalancing: What It Means for Flow Dynamics
- They ditched the rulebook, used a market cap filter to pick the top 5, and watered down PBR and ROE, making them irrelevant. Market cap was the real deciding factor.
- KRX hasn’t confirmed it, but local sources say the special rebalancing was based on the top 50 KOSPI market caps as of the December 13th close.
- The shift was driven by local pension funds, especially NPS, which pushed for more big-cap exposure to trigger Value-Up investments, signaling a potential ramp-up in their involvement.
New Corporate Value Up Plans of POSCO Holdings and POSCO International
- Both POSCO Holdings (005490 KS) and Posco International Corporation (047050 KS) provided solid, new Corporate Value Up reports.
- However, POSCO International’s plan is much better. POSCO International plans to provide total shareholder returns of 50% which is more than double of its previous total shareholder return plan.
- This sharp increase in shareholder returns is likely to lead to share outperformance of POSCO International relative to the market in the next several months.
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