In this briefing:
1. Woori Bank Holdco Conversion: Current Status & Trade Approach
- Woori Bank (000030 KS)‘s stock purchase period ended last Friday. We will enter trade suspension starting Jan 9 and until Feb 12. Dilution is only 0.6%. But overhang would be an issue.
- Local hedge fund-like institutions are shorting it mainly on overhang risk. Woori Investment Bank (010050 KS) and Woori Card moving up will worsen this overhang risk. Stock purchase is now over. The need to boost the price must have gone as well.
- I’d also short Woori Bank at this point. Jan 9~Feb 12 trade suspension would be too long to go without a hedge. Industrial Bank Of Korea (024110 KS) would make a good hedge. Woori and IBK have traditionally been highly correlated. They are also seen sufficiently cointegrated.
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