Rainy 'KOSPI' and Foreign Investors' Choice 'SK'

SK REITs (SK Entrusted Management Real Estate Investment Company) will enter the KOSPI market next month. On the 18th, the SK Group headquarters located in Jongno-gu, SK Seorin Building. Photo by Moon Honam munonam@

[Asia Economy Reporter Junho Hwang] On the 24th, when the KOSPI failed to surpass the 3000 mark and recorded a decline, SK and SK Materials rose by 6.98% and 6.49%, respectively. The securities industry is paying attention to the impact of foreign passive funds inflow due to the merger between the two companies, and this effect is expected to continue through this week.

According to the financial investment industry on the 25th, due to the merger between the two companies, trading of SK Materials' shares will be suspended from the 29th of this month until the 24th of next month. During this period, the two companies will proceed with the merger process, allocating 1.58 shares of SK stock for each share of SK Materials, increasing the number of shares of the 'merged SK' from 70.36 million to 76.32 million. The market capitalization is expected to expand from 17.1 trillion KRW to 18.6 trillion KRW, and the free float market capitalization will also increase from 7.7 trillion KRW to 10.2 trillion KRW. The new shares from the merger will be listed on the 27th of next month.

Among the two companies, SK is included in the MSCI Emerging Markets Index published by Morgan Stanley Capital International. This index includes companies that meet certain market capitalization and liquidity criteria, and as SK's market capitalization grows due to the merger, more tracking funds need to be invested accordingly. According to Samsung Securities, this proportion increases from 0.082% to 0.109%, with the actual supply and demand impact amounting to 152.8 billion KRW.

Dongyoung Kim, a researcher at Samsung Securities, analyzed, "The foreign net buying and sharp price increase of the two stocks the previous day were due to the influence of MSCI tracking funds," adding, "The passive fund demand to adjust weights by the 26th and the front-running effect of active funds trying to utilize this worked together." He further explained, "Index tracking funds usually buy the stock with relatively better price attractiveness among the two, and trading volume is typically highest on the last trading day." As he mentioned, foreigners net bought SK shares worth over 30 billion KRW (39.37853 billion KRW) for the first time since the 5th on the previous day.

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