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 Feb. 2 ― 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 among the lowest 15 percent of all shares on the bourses. 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 on the index are subject to change twice a year, in June and December.
The addition of five more firms from the initial plan was due to the those companies’ spinoff or division and re-listing on markets since December 2017. Starting in June this year, the number of companies will be reduced to 300.
If the KRX 300 existed in 2017, the index would have drawn 24.8 percent of all profits, higher than that of the Kospi 200.
The KRX 300 is also estimated to have lower volatility than the Kospi 200, with a one-year volatility rating of 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 relisting to the Kospi early this year.
The South Korea Stock Exchange is open 32.5 hours per week. Most stock exchanges are open 25 to 35 hours per week with 5 days of trading per week.
There are several exchanges that are only open 4 days per week and one exchange that is only open 2 days per week. The Deutsche Borse is open more than any other stock exchange.
Limited trading hours help to reduce volatility in stock prices but also limits the liquidity of stocks. When trading hours are shorter more news reports and earnings reports are published while the markets are closed.
As a result, investors have more time to process new information and general make fewer knee-jerk reactions. Read more about how trading hours vary around the world.
The South Korea Stock Exchange is open 32.5 hours per week which is average. Most stock exchanges are open 25 to 35 hours per week with 5 days of trading per week.
A view of the Statue of Bull Award unveiled on March 2 at the Korea Exchange head office in Busan.(Photos: KRX)