Daily BriefsSouth Korea

South Korea: SK Telecom, Enchem and more

In today’s briefing:

  • SK Telecom: MSCI Special Deletion & Immediate Price Spike on Share Recall
  • SK Telecom (017670 KS): Implications of Zero Foreign Room
  • KOSDAQ 150 Rebalancing: Complete List of Candidates, Including Enchem

SK Telecom: MSCI Special Deletion & Immediate Price Spike on Share Recall

By Sanghyun Park

  • Looking at these past similar cases, the MSCI will likely announce SKT’s special deletion within 2-3 days of reaching zero foreign room and rebalancing within 2-3 days after the announcement.
  • We will see a passive outflow of about 2M shares or about ₩115B, equivalent to 2.7x ADTV, which will likely lead to an immediate price spike.
  • ETF funds tracking the MSCI have a large proportion of loaning SKT shares. So, when an MSCI down-weight occurs to SKT, an immediate recall will push up the price.

SK Telecom (017670 KS): Implications of Zero Foreign Room

By Brian Freitas

  • Foreign investors hold 106.51m shares of SK Telecom (017670 KS) versus a limit of 107.23m shares. There are only 723k more shares (1 day of ADV) available for foreign buying.
  • MSCI will delete SK Telecom (017670 KS) from its indices once the foreign room reaches zero, while FTSE will likely reduce the investability weight in two tranches of 5% each.
  • SK Telecom (017670 KS) could continue underperforming KT Corp (030200 KS) in the short-term due to passive selling and inability of foreign investors to buy the stock.

KOSDAQ 150 Rebalancing: Complete List of Candidates, Including Enchem

By Sanghyun Park

  • Enchem (348370 KS) is in a bit tricky situation. Applying the KRX’s review period calculation criterion to Enchem satisfies the minimum listing requirement.
  • So, we should consider Enchem’s addition odds quite high. Enchem’s inclusion will pave the way for Sungwoo Hitech (015750 KS) to leave the Index.
  • We have ten adds/deletes, and WYSIWYG Studios (299900 KS) leads the adds for the passive impact, whereas JNTC Co Ltd (204270 KS) will suffer the most relative to ADTV.

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