MSCI logo / Reuters-Yonhap
By Anna J. Park
SK Bioscience, SKIET and EcoProBM have been newly added to the Morgan Stanley Capital International (MSCI) Korea index in its quarterly review released this month.
While KMW has been removed from the Korea index, SK Telecom’s weight will be reduced in the index as the portion of its shares owned by foreign investors has been increased. MSCI adjusts each stock’s weight in the index depending on whether foreign investors could gain more ownership or not.
KakaoBank made it onto the MSCI’s Emerging Market (EM) index, while recently listed game company Krafton failed to be included in the index this time. Its re-addition to the list will be decided at November’s quarterly review.
Newly added stocks are expected to enjoy buoyance in their prices, as huge amount of passive ETFs that tracks the MSCI Korea index will start to pour in. On Thursday’s stock market, SKIET and EcoProBM advanced 7.41 percent and 2.25 percent, respectively.
As the changed index will take effect from early next month, global passive ETF funds tracking the index are set to adjust their investment portfolios at the end of this month.
Yuanta Securities estimated that SK Bioscience will receive an additional 345 billion won ($297 million) from the global passive funds, while SKIET is expected to receive 335 billion won and EcoProBM 320 billion won.
Investors are advised to purchase the named stocks on the announcement day and sell them after the date of the index’s taking effect. Shinhan Financial Investment said it expects EcoProBM to enjoy the highest returns from the index effect.
“The index adjustment event provides a good opportunity for investors seeking alpha returns. Stocks newly added to the MSCI Korea index in 2020 and 2021 all enjoyed returns higher than the market average,” said Noh Dong-kil, an analyst at Shinhan Financial Investment.Internet Explorer Channel Network