"Be Cautious of KOSPI 200 Index Volatility Stocks Next Month"

Key Changes in KOSPI 200 Constituents
Short-Selling Target Stocks Also Altered

On the first day of the partial resumption of short selling on the 3rd, the KOSPI index is displayed on the electronic board in the dealing room of Hana Bank in Euljiro, Seoul. Photo by Mun Honam munonam@

[Asia Economy Reporter Junho Hwang] Next month, as the Korea Exchange conducts the first stock index changes of the year, it is expected that individual stocks will experience mixed fortunes. In particular, the changes in the constituent stocks of the KOSPI 200 and KOSDAQ 150, which have large passive fund tracking scales and serve as the basis for short-selling application, are the key points to watch.

According to the financial investment industry on the 10th, the Korea Exchange is expected to announce the stock index changes within this month. The implementation date for the constituent stock changes is the futures and options expiration date on the 10th of next month. Funds tracking the exchange indices will replace constituent stocks on that day. Among these, stocks newly included in the KOSPI 200 and KOSDAQ 150 can expect inflows of fund capital. Conversely, stocks removed from the indices are likely to see capital outflows.

With this index change, the stocks subject to short-selling will also change. As short-selling resumes for stocks within the KOSPI 200 and KOSDAQ 150, a short-covering effect due to the liquidation of short positions from removed stocks is anticipated.

NH Investment & Securities predicted that Hyosung TNC, Hyosung Advanced Materials, Daehan Electric Wire, and Dongwon Industries would be included in the KOSPI 200 in this change. Among them, Hyosung TNC, which has the largest free-float market capitalization (market capitalization considering the free-float ratio), is expected to generate approximately 81.3 billion KRW in passive buying demand. On the other hand, Namsun Aluminum, Binggrae, Taeyoung Construction, and Samyang Corporation are expected to be removed.

Special inclusion is also expected in this change. The leading candidate is SK Bioscience. Although it is not eligible for inclusion in the KOSPI 200 as it has been listed for less than six months, it meets the special inclusion criteria by rising into the top 50 in market capitalization of common stocks.

Researcher Donggil Noh from NH Investment & Securities Research Center said, "Special inclusion stocks have previously experienced a decline in relative returns due to supply and demand pressure following the end of lock-up periods after the index inclusion event." He added, "More distinct index effects were observed in stocks removed from the index compared to newly included stocks."

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