Daily Brief South Korea: SK Hynix, Hyosung Corporation, Cmg Pharmaceutical, Tse Co Ltd and more

• Since 2x leveraged ETFs linked to SK hynix (000660 KS) launched in late May, volatility in the underlying stock has increased significantly.
• Although daily rebalancing can amplify price moves, the data do not indicate that it does so systematically.
• Overnight and intraday returns are largely uncorrelated across the sample, although they tend to reinforce each other on days with extreme moves.

• I provide an update of the potential KOSPI200 rebalance candidates in December 2026.
• The bottom 5% market caps in KOSPI200 could be excluded from the KOSPI200 rebalance in December 2026. These 10 stocks are down on average 24.5% YTD vs KOSPI (up 56.1%).
• I also provide five potential inclusion candidates which are up on average 57.6% YTD. 

• On 12 August, the KRX designated 36 companies as administrative issues for potential delisting for failing to meet share price and market capitalization standards. 
• They could potentially be delisted. There are potential trading opportunities among these 36 stocks.
• The key is to be on the lookout for companies with decent balance sheets that are willing to improve their corporate governance.

• We remain bullish (as of our 4/21/26 Compass) on the S&P 500 (SPX), Nasdaq 100 (QQQ), and Russell 2000 (IWM). 
• Additionally, we continue to believe the bottom is in for SPX, IWM, QQQ, and Technology areas (XLK, IGV, SOXX, CHAT).
• With that said, some mixed price action in A.I. themes — notably semiconductors (SOXX), generative A.I. (CHAT), memory (DRAM), and neoclouds (WGMI) — are giving us some reason for pause.

• TSE is a key supplier of semiconductor test solutions, specializing in probe cards and interface boards, poised to benefit from the long-term growth in chip complexity and demand from AI, 5G, and automotive sectors.
• The company is demonstrating strong growth momentum, with a significant revenue increase in the most recent fiscal year and a positive outlook, further bolstered by the potential for substantial passive fund inflows from its anticipated inclusion in the KRX Semis index.
• While valuation appears reasonable compared to some high-flying peers, the company operates in a highly cyclical industry, faces intense competition, and has shown volatility in profitability and cash flow generation.

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