Will Kakao Bank and Krafton Be Included in the 'KOSPI 200'?

High Possibility of Inclusion at 9th and 15th Market Cap Rankings
Index Inclusion Expected to Attract Index Fund Inflows

[Asia Economy Reporter Hwang Junho] KakaoBank (Kabang) and Krafton, the largest initial public offerings (IPOs) in the second half of this year, have shown favorable stock price trends, increasing the likelihood of their inclusion in the KOSPI 200 next month. Index fund inflows are expected following their inclusion in the index.

According to the Korea Exchange on the 23rd, Kabang's market capitalization as of the 20th was 43.2341 trillion KRW, ranking 9th in the KOSPI market cap rankings. This is 179.9 billion KRW more than Hyundai Motor's market cap. Kabang, which was listed on the 6th, closed trading on the listing day at 69,800 KRW, a 79.0% increase from the public offering price of 39,000 KRW. Since then, until the previous trading day (the 20th), the stock price return has been 30.4%.

Although not matching Kabang, Krafton recorded a market capitalization of 24.0334 trillion KRW, rising to 15th place in the market cap rankings. Krafton, listed on the 10th, closed at 454,000 KRW on the listing day, below the public offering price of 498,000 KRW, but the closing price on the 20th was 491,500 KRW, showing an 8.3% return since listing.

In the securities industry, since the market caps of both stocks remain within the top 50 of the KOSPI and have shown an upward trend since listing, it is highly likely they will be included in the KOSPI 200 on the 9th of next month. New inclusion in the KOSPI 200 is possible if the average daily market capitalization within 15 trading days from the listing date ranks within the top 50 among KOSPI common stocks. The current average market caps of Kabang and Krafton are 38 trillion KRW and 22.1 trillion KRW, respectively, far exceeding the average market cap of the 50th ranked stock, which is 7.4 trillion KRW.

If the two stocks are included in the KOSPI 200, inflows of index funds are expected. Daishin Securities estimated the expected inclusion weights of Kabang and Krafton at 1.09% and 1.06%, respectively. Based on this, passive fund inflows are expected to range from 163.7 billion to 654.9 billion KRW for Kabang and from 159.1 billion to 636.5 billion KRW for Krafton. The minimum figures consider only exchange-traded funds (ETFs) tracking the KOSPI 200 (totaling 15 trillion KRW), while the maximum figures include index funds, pension funds, and other benchmark assets (totaling 60 trillion KRW).

Kim Jiyoon, a researcher at Daishin Securities, analyzed, "Considering only ETFs tracking the KOSPI 200, the expected inflow relative to the average trading volume since listing is 0.1 times for KakaoBank and 0.2 times for Krafton."