Stock Prices Rise as Shinpoong Pharmaceutical and Big Hit Join KOSPI 200

[Asia Economy Reporter Song Hwajeong] Stocks newly included in the KOSPI200 index are experiencing price increases due to expectations of inclusion.

According to the Korea Exchange on the 27th, Shinpung Pharmaceutical, Kiwoom Securities, Big Hit, Samyang Foods, Hanwha Systems, and CS Wind closed with gains from the previous day. Shinpung Pharmaceutical closed at 128,500 KRW, up 7.89% from the previous trading day, and Kiwoom Securities rose 6.67%. Samyang Foods increased by 5.74%, Hanwha Systems by 3.86%, CS Wind by 2.39%, and Big Hit by 1.15% respectively.

These stocks were included in the KOSPI200 during the December regular rebalancing. The Korea Exchange announced the results of the regular rebalancing of the KOSPI200, KOSDAQ150, and KRX300 indices on the 25th. In this change, in addition to Shinpung Pharmaceutical, Kiwoom Securities, Big Hit, Hanwha Systems, Samyang Foods, and CS Wind, 10 stocks including Doosan Fuel Cell, Daewoong, Namsun Aluminum, and Zinus were newly included. Meanwhile, 10 stocks including Dong-A Socio Holdings, SeAH Besteel, Lotte Food, and BGF were excluded. The results of this regular rebalancing will be reflected starting from the 11th of next month.

Stocks excluded from the KOSPI200 showed weak price performance. Dong-A Socio Holdings fell 2.33% the previous day, continuing a four-day losing streak, SeAH Besteel dropped 1.85%, Lotte Food declined 0.91%, marking two consecutive days of losses, and BGF closed down 5.07%.

Regarding the regular rebalancing, it is analyzed that a trading strategy of buying included stocks and selling excluded stocks is effective. Kyobo Securities researcher Kang Hyunjung said, "Looking at five years from June 2016, the effect of a short-term trading strategy based on the KOSPI200 regular rebalancing event has continued," adding, "Examining 20 trading days before and after the exchange’s rebalancing announcement date, a portfolio that buys included stocks and sells excluded stocks starts rising before the announcement date and reaches its peak cumulative performance around 10 to 11 trading days later, on the rebalancing effective date."

In particular, there are expectations for the index inclusion effect of Big Hit, which was specially included this time. NH Investment & Securities researcher Noh Donggil explained, "Among the KOSPI200 included stocks, those with a high passive inflow ratio compared to the 20-day average trading volume are Samyang Foods, Kiwoom Securities, Hanwha Systems, Zinus, and Daewoong in that order," adding, "An index effect can be observed in Big Hit, which was specially included."