"Used Only One Place for 3 Months?"... Controversy Over K-New Deal Index Increases

Exchange Grants Mirae Asset Management 3-Month Exclusive License for 'KRX BBIG K-New Deal Index'

Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance (left), and Eun Sung-soo, Chairman of the Financial Services Commission, are pointing at a panel after finishing a briefing on the "Korean New Deal Financial Support Plan" at the Government Seoul Office Building on the afternoon of the 3rd. (Photo by Yonhap News)

[Asia Economy Reporter Kum Boryeong] Various controversies have arisen over the 'K-New Deal Index' announced by the Korea Exchange.

According to the financial investment industry on the 16th, the Exchange granted Mirae Asset Global Investments an exclusive usage right for the 'KRX BBIG K-New Deal Index' for three months.

The K-New Deal Index was created by selecting 12 stocks with large market capitalizations (three stocks per sector) from the so-called 'BBIG (Battery, Bio, Internet, Game)' sectors. This includes LG Chem, Samsung Biologics, NAVER, and NCSoft.

The issue arose when the Exchange renamed the BBIG-related index devised by Mirae Asset Global Investments as the K-New Deal Index. Mirae Asset Global Investments created an index containing major BBIG stocks and requested the Exchange to develop the index, but the Exchange launched it as the K-New Deal Index. Furthermore, by granting Mirae Asset Global Investments an exclusive usage right for three months, other asset management companies were unable to list exchange-traded funds (ETFs) tracking the index. Previously, the exclusive usage right was granted for six months, but due to opposition from asset managers, the Exchange shortened it to three months.

In response, Samsung Asset Management, KB Asset Management, NH-Amundi Asset Management, and others are creating the 'FnGuide K-New Deal Index' together with the index developer FnGuide. This is based on the judgment that they cannot delay the launch of New Deal-related ETFs by three months amid expected policy benefits. They have currently requested Koscom to develop the logic.

An official from an asset management company explained, "ETFs need to have high trading volumes initially, and if it were possible to list six months later than Mirae Asset Global Investments (as previously discussed), it would have been game over," adding, "Even three months later feels somewhat late." Another asset management company official said, "Mirae Asset Global Investments is scheduled to list on the 7th of next month anyway," and added, "The sooner the Exchange approves the FnGuide New Deal Index, the more grateful other asset management companies will be."

However, the Exchange pointed out that there are many similarities between the existing New Deal Index and the New Deal Index being developed by FnGuide. In response, FnGuide is considering matters such as changing the inclusion weights or renaming the index.