In today’s briefing:
- Watch This Friday’s TIGER Top 10 Semicon Rebalance
- Talk of Deploying Korean Market Stabilization Fund Ramps Up Today
- A Pair Trade Between Korean Air and Hanjin Kal
- ABLBio (298380 KS): Continued License Out Deals and Milestone Payment Realization to Feed Pipeline
- Key Takeaways from the Updated Filing on Hanwha Aero’s Rights Offering
- Asian Equities: A Few Genuine Defensives in This Bloodbath
Watch This Friday’s TIGER Top 10 Semicon Rebalance
- After the March avg daily market cap screen, Wonik IPS is swapped for Jusung Engineering. Big passive impact expected—Jusung gets 1x ADTV buy flow, Wonik faces 2.6x ADTV sell.
- Watch for passive flow timing—last rebalance (Oct 11), ISC Co Ltd got kicked, Wonik IPS called up. TIGER split Wonik’s rebalance over two trading days to minimize price impact.
- The long/short yield was 2.89% on Oct 11, 3.96% over two days. With bigger passive flow impact, TIGER may split the rebalance—enter near Thursday close, exit by Monday afternoon.
Talk of Deploying Korean Market Stabilization Fund Ramps Up Today
- This afternoon, local media has been buzzing about the potential deployment of the ₩10T Market Stabilization Fund, with signs pointing to its first inflow into the market in five years.
- It’s likely to create a supply-demand imbalance, driving significant price action and requiring adjustments to our short-term outlook for the Korean market.
- Most of the money is expected to flow into KOSPI 200 ETFs, so we should watch for a major passive flow impact during KOSPI 200 rebalancing in June and December.
A Pair Trade Between Korean Air and Hanjin Kal
- In this insight, we discuss a pair trade between Korean Air Lines (003490 KS) (go long) and Hanjin KAL Corp (180640 KS) (go short).
- In the past three months as well as 12 months, there has been a sharp increase in the gap of Korean Air Lines and Hanjin KAL Corp.
- It is uncertain how much longer Hoban Group will maintain its stake in Hanjin Kal. Hoban could reduce its stake in Hanjin Kal but increase its stake in LS Corp.
ABLBio (298380 KS): Continued License Out Deals and Milestone Payment Realization to Feed Pipeline
- ABLBio (298380 KS) announced licensing agreement with GlaxoSmithKline PLC (GSK LN) to develop novel treatments for neurodegenerative diseases by utilizing ABL Bio’s blood-brain barrier (BBB) shuttle platform, Grabody-B.
- ABL Bio is eligible to receive up to £2.075B in research, development, regulatory, and commercialization milestone payments across multiple potential programs. The company will receive tiered royalties on net sales.
- Last October, ABL Bio completed the manufacturing technology transfer for ABL301, a bispecific antibody containing Grabody-B to treat Parkinson’s disease, to Sanofi and unlocked a milestone payment of $5M.
Key Takeaways from the Updated Filing on Hanwha Aero’s Rights Offering
- Hanwha shot down any merger talks between Hanwha Corp and Hanwha Energy, saying they’re just going to funnel Energy’s cash straight into Hanwha Aero via a third-party allotment.
- These confirm no price manipulation for Hanwha Corp; Hanwha Energy will inject cash into Aero at market value, likely driving bullish short-term price action for both Hanwha Corp and Aero.
- Despite tighter arb opportunities, doubts remain whether Hanwha Aero can raise the remaining KRW 1.6 trillion given a volatile market and the tight timeline.
Asian Equities: A Few Genuine Defensives in This Bloodbath
- Tariff turmoil crashed S&P500 by 18% and MSCI Asia ex Japan by 13% over the past couple of weeks. But even amid this carnage, a handful of stocks have appreciated.
- These “genuine defensives” are predominantly from utilities, telecommunications and consumer staples. HK/China and Korea dominate with one entry from Singapore. They have cheap valuations, stable earnings estimates and revenue visibility.
- In addition to eleven defensives we highlight, there are other stocks that have appreciated – notably few HK pharmaceutical stocks HK and 18 Indian stocks. They are not cheap, however.
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