KRX unveils new composite benchmark KRX 300 week ahead of launch

The Korea Exchange, operator of the stock markets Kospi and Kosdaq, announced immediately after markets closed Tuesday a list of firms included on the new composite benchmark index KRX 300, ahead of its launch on Feb. 5.

On the list were 305 firms. Of them 237 -- making up of 91.1 percent of the index’s market cap as of Friday -- were from the top-tier Kospi, while the other 68 came from the second-tier Kosdaq.

The 305 companies were selected among the top 700 firms in market cap from both markets, unless their trading volumes were the lowest 15 percent.

Divided into nine categories following the guidance of the Global Industry Classification Standard, shares from the information technology sector accounted for over 40 percent.

The index will cover 84.7 percent of the combined market cap of the Kospi and Kosdaq, slightly lower than the benchmark Kospi 200, covering 90 percent of the market cap of both the Kospi and Kosdaq.

The companies of the index are subject to change on a regular basis twice a year, on June and December.

The addition of five firms from its initial plan was due to the five companies’ spinoff or division and re-listment to markets since December 2017. Starting June this year, the number of companies will be reduced to 300.

If the KRX 300 had existed in 2017, the index would have drawn 24.8 percent of profits, higher than that of the Kospi 200.

The KRX 300 is also estimated to have lower volatility than the Kospi 200, with the one-year volatility at 9.8 percent and 10.1 percent, and with the five-year volatility at 11.9 percent and 12.2 percent, respectively.

The KRX 300 is expected to enhance the investment flow of large Kosdaq-listed stocks. There were views that firms listed on the second-tier bourse had limited access to investments, since investments have concentrated on the Kospi 200, tracked by over 10 exchange-traded funds and over 20 exchange-traded notes.

Internet giant Kakao was transferred to the Kospi in July 2017, while Celltrion -- the No. 1 Kosdaq share in market cap -- eyes relistment to the Kospi early this year.

By Son Ji-hyoung (consnow@heraldcorp.com)