Korean Holdcos Vs Opcos Gap Trading Opportunities in 3Q 2024
In this insight, we highlight the recent pricing gap divergences of the major Korean holdcos and opcos which could provide trading opportunities in 3Q 2024.
Of the 38 pair trades, 21 of them involved holdcos outperforming opcos in the past six months, suggesting increased capital allocation to Korean holdcos relative to their opcos.
These pairs could generate trading opportunities in terms of their pricing gaps closing reversal (Doosan Corp vs. Doosan Enerbility; Hyundai Mobis vs Hyundai Motor).
In the section below, we separated the pair trades into two different sections. The first table involves major opcos outperforming holdcos (regular and quasi) in the past six months. Of the 38 pair trade strategies mentioned in this insight, section I (which includes opcos outperforming holdcos in the past six months) included 17 pairs (45% of total). The section II (which includes holdcos outperforming the opcos in the past six months) involves 21 pairs (55% of total). We describe the holdcos as either regular or quasi. Hyundai Mobis and Samsung C&T would be examples of "quasi" holdcos whereas Orion Holdings would be an example of regular holdco.
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