In today’s briefing:
- FTSE All-World/All-Cap Index Rebalance: Inclusions, Deletions & Other Changes
- LG Chem & LG Energy LONG/SHORT Pair Trading on a Massive NAV Discount
- SK Telecom Multi-Step Trading Scenario for Underlying & ADR Amid Zero Foreign Room
FTSE All-World/All-Cap Index Rebalance: Inclusions, Deletions & Other Changes
- For Asia Pacific, there are 8 inclusions each to the All-World Index and the All-Cap Index at the June QIR. Quite a few have over 3 days ADV to buy.
- There are also changes to the NOS and investability weights that will require passive funds to buy/sell a lot of stocks. Some have a reasonably large impact/flow.
- A lot of the IPOs are trading below their offering prices and investors could be looking to sell into any rallies that take the stocks close to their IPO prices.
LG Chem & LG Energy LONG/SHORT Pair Trading on a Massive NAV Discount
- The LG Chem/LG Energy pair has been getting much attention lately. Its stakeholding value in LG Energy amounts to ₩83.1T, more than twice its own market value.
- Given LG Chem’s solid operating business value, only the likes of SK Square is worse in terms of NAV discount, as LG Chem’s NAV discount is nearing 70%.
- With the LG Chem OUT/LG Energy IN passive play pretty much completed, we should aim at an entry point for LG Chem’s massive discount to its LG Energy shareholding value.
SK Telecom Multi-Step Trading Scenario for Underlying & ADR Amid Zero Foreign Room
- We first consider a currency hedging setup to target an ADR premium surge before SKT reaches zero foreign room. We close this position as the MSCI special deletion is announced.
- We then move onto an outright long position on the SKT underlying shares to capitalize on potential share recall.
- Lastly, I would quickly jump onto a KT LONG/SKT SHORT position to target potential alternative trading flow.
Before it’s here, it’s on Smartkarma
