In today’s briefing:
- Block Deal Sale of Hyundai Heavy Industries
- SK Telecom Nearing Zero Foreign Room & May Spark Alternative Trading for KT Corp
- Hyundai Heavy Liquidation by KSOE & Passive Flow Tightening Recalculations
- KRX New Deal Index Rebalance Preview: Buying on KMW; Selling on AfreecaTV
- Joe Biden’s Visit to South Korea: Hyundai Motor Ready to Announce $7 Billion Investment in EVs in US
Block Deal Sale of Hyundai Heavy Industries
- After the market close today, Korea Shipbuilding & Offshore Engineering announced that will sell 1.7% of its shares (1.5 million shares) in Hyundai Heavy Industries in a block deal.
- The block deal sale is expected to take place on the morning of 17 May. The block deal price is expected to be 120,650 won.
- We would take this deal as we believe this sale is likely to have a short term positive impact on HHI and increase the free float of HHI.
SK Telecom Nearing Zero Foreign Room & May Spark Alternative Trading for KT Corp
- What immediate impact will SKT’s zero foreign room have? The recent trading theme that the local market is paying attention to is the alternative purchase of KT instead of SKT.
- The recent driving force behind SKT’s foreign buying is the growing market preference for defensive stocks with high dividend yields. And KT also meets this condition.
- However, SKT’s foreign room may turn around temporarily: 1. SKT’s deletion possibility from the MSCI through a special change and 2. the FTSE investability down-weight at the June QIR.
Hyundai Heavy Liquidation by KSOE & Passive Flow Tightening Recalculations
- KSOE will sell 1.5M shares, equivalent to 1.70% of SO, at an expected discount rate of 5%. After the disposal, KSOE’s stake will fall to 78.02%.
- The need to increase float shares (and loan balance) due to the MSCI inclusion and the KOSPI 200 up-weight should be considered as the company’s pre-emptive response to the market.
- But even with today’s disposal, the MAXIMUM real-world float will be 11.29%. An additional passive inflow equivalent to 1.73% of SO will occur until June 9th, 5.13x ADTV.
KRX New Deal Index Rebalance Preview: Buying on KMW; Selling on AfreecaTV
- The review period for the September rebalance of the KRX New Deal indices started on 1 May and will run till 31 July. Implementation is on 8 September.
- Intellian Technologies (189300) could replace Danal Co Ltd (064260) in the Internet index, while KMW Co Ltd (032500 KS) could replace AfreecaTV (067160 KS) in the top 3 index stocks.
- Nexon Games (225570 KS) could replace Devsisters (194480 KS) in the Game Index, though the flows are small on the stocks given the small benchmarked AUM.
Joe Biden’s Visit to South Korea: Hyundai Motor Ready to Announce $7 Billion Investment in EVs in US
- The US President Joe Biden is planning to visit South Korea on 20 to 22 May to meet the new South Korean President Yoon Suk-Yeol.
- Hyundai Motor is likely to announce investments of nearly $7 billion for building a mega EV facility in Georgia which was leaked in the media in the last few days.
- Hyundai Motor is aggressively penetrating the global EV markets and it is becoming an increasing threat against Tesla. Hyundai Motor has outperformed Tesla in the past 6 months.
Before it’s here, it’s on Smartkarma
