Samyang Foods and Hanwha Systems Newly Added to MSCI Korea Index

Hanwha Systems and Samyang Foods have been newly added to the Morgan Stanley Capital International (MSCI) Korea Index. Ecopro Materials and NCSoft have been excluded.

MSCI, which calculates global stock indices, announced on May 14 that it had adjusted the components of the Korea Index in its regular May review.

As a result, the number of constituents in the MSCI Korea Index will remain unchanged at 81. The rebalancing based on the regular review will take place after the market closes on May 30.

The MSCI Index is one of the most influential stock indices in the world. Every year in February, May, August, and November, the index components are adjusted based on criteria such as market capitalization and free-float market capitalization. Inclusion in the index can attract passive funds that track the index, while exclusion may be disadvantageous in terms of capital inflows.

Previously, in February, there were no new inclusions due to the sluggish domestic stock market, and 11 stocks were excluded at once.

Kim Dongyoung, a researcher at Samsung Securities, said, "As initially expected, there were two inclusions and two exclusions. As predicted, Hanwha Systems and Samyang Foods were added, and the estimated scale of capital inflows for these stocks is about 100 billion to 130 billion KRW."

It appears that stocks excluded from the index may experience greater supply and demand shocks, so caution is needed. Bae Cheolgyo, a researcher at NH Investment & Securities, analyzed, "With the resumption of short selling and the increased ease of establishing long-short positions, the supply and demand shock for excluded stocks could be amplified. Past cases show that the downside volatility of excluded stocks was higher during periods when short selling was allowed compared to periods when it was banned." He added, "However, after the rebalancing is completed and the event passes, there have been instances where the stock price trends of included and excluded stocks reversed."