What is the MSCI August Quarterly Review Strategy? Increased Inclusion Possibility for Seegene and Alteogen

[Asia Economy Reporter Song Hwajeong] As the Morgan Stanley Capital International (MSCI) August quarterly review approaches, interest in newly included stocks is growing.

According to the financial investment industry on the 31st, the MSCI quarterly review results will be announced in the early morning of the 13th (Korean time). Generally, there are not many changes in stocks during the quarterly review, but due to increased market volatility since the COVID-19 pandemic, significant changes are expected this time. Dongyoung Kim, a researcher at Samsung Securities, said, "Due to COVID-19 and the spread of the untact culture, stock price fluctuations by stock have been significant over the past three months, so this quarterly review will see greater changes than in the past."

Stocks with a high possibility of new inclusion include Seegene and Alteogen. As of the closing price on the 30th, Seegene's market capitalization is 6.3932 trillion KRW, accounting for 2.12% of the market cap weight. Alteogen's market cap is 2.4409 trillion KRW, with a market cap weight of 0.81%. Seegene's stock price has risen 116.05% over the past month. Alteogen, which conducted a bonus issue, saw a 33.9% increase in adjusted stock price over the past month. Donggil Noh, a researcher at NH Investment & Securities, explained, "For index inclusion, the semi-annual review requires exceeding the total market cap cutoff by 1.5 times, and the quarterly review strengthens this to 1.8 times. Seegene and Alteogen exceed the cutoff by more than 1.8 times in market cap and also meet the free float market cap criteria (half of the cutoff)." He added, "However, considering that the market cap reference date for the August review is a randomly selected day among the last 10 trading days of July, results may vary depending on stock price fluctuations."

Regarding SK Biopharm, which has attracted much attention for index inclusion since its listing earlier this month, the outlook is that inclusion will be difficult this time. As of the closing price on the 30th, SK Biopharm's market cap is 14.4879 trillion KRW, exceeding the 1.8 times cutoff, thus meeting the total market cap criterion. However, its free float market cap falls short of the standard. The reason SK Biopharm was not included early in MSCI after listing was also due to failing the free float market cap criterion. MSCI excludes institutional investors' lock-up shares when calculating the free float ratio. Researcher Noh said, "SK Biopharm's free float ratio rose to 13.4% as of the 27th, when the one-month lock-up ended. The free float market cap is estimated at 1.96 trillion KRW as of the 29th, which is close to the cutoff of 1.98 trillion KRW. Inclusion depends on the market cap reference date, so the possibility is slightly below 50%." However, inclusion chances are higher in the November semi-annual review. Seonghoon Kwak, a researcher at Shinhan Financial Investment, said, "In November, the three-month institutional lock-up (2.1% of total shares) will be lifted, and the market cap cutoff will be lower than in August, so the possibility of inclusion in the November semi-annual review is higher than in August."

There is an opinion that attention should be paid to stocks scheduled for additional inclusion. Researcher Kim said, "Assuming that the stocks scheduled for addition have not risen excessively in advance, there has been a pattern of improved demand and rising stock prices after the regular review announcement. Attention to these stocks is necessary."

This content was produced with the assistance of AI translation services.