The chart of the main stock index of Korea – KOSPI. Online quote forecast, review and description of the base and formulas for calculating the cost, examples of ETF funds. The KOSPI stock index includes more than 700 companies, the country's largest chaebols (the South Korean name for structures resembling financial-industrial groups), and the index itself is focused on the real sector of the economy. The KOSPI index has been growing steadily for decades. KOSPI Composite Index is a general stock index, includes several sub-indices (50, 100 and 200 depending on the number of companies included). There are no futures directly on the KOSPI Composite Index on the South Korea Stock Exchange, but regular and mini contracts on the KOSPI 200 stock index are available. There is almost 100% direct correlation between these indices.
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About KOSPI
KOSPI Composite Index is a general stock index, includes several sub-indices (50, 100 and 200 depending on the number of companies included). There are no futures directly on the KOSPI Composite Index on the South Korea Stock Exchange, but regular and mini contracts on the KOSPI 200 stock index are available. There is almost 100% direct correlation between these indices.The same futures are also traded on the European Exchange (Eurex). The mini contract has a minimum price change of 0.02 points – equivalent to 1,000 South Korean won. Options are also traded, options on futures on the Cospi 200. Trading hours on Eurex are limited to 10:00 to 21:00 Central European Time (GMT+01:00).
Kospi is the South Korean equivalent of the American S&P 500, the country's main stock index, characterizing the state of the South Korean economy. When forming the list of companies, the emphasis is on the real sector of the economy.
The first stock index in South Korea's history was launched on January 4, 1964, when the index included 17 of the country's largest companies. By 1979, the composition had grown to 35 companies, all of which were listed on the South Korean stock exchange. That same year, the index was renamed the Korea Composite Stock Index (KCSPI).
The new index was officially introduced on January 4, 1983, when the Korea Composite Stock Index (KOSPI) was introduced. The starting point was January 4, 1980.
The index capitalization is 1428.889082 trillion South Korean won, which exceeds $1.0 trillion. Despite the colossal leap of the South Korean economy, the KOSPI rate has increased only 21 times.
The index quotes are influenced by:
- The state of the world economy and especially the Asian region;
- Dependence on the financial state of chaebols (financial-industrial groups). A fall in the stock prices of a "heavyweight" in the index basket leads to a decline in the index itself;
- The exchange rate of the South Korean won. The growth of the national currency of South Korea makes the products of local companies less competitive;
- Force majeure factors. For example, when the mortgage bubble in the USA collapsed in 1998, the quotes of the Cospi grew by 8.5%, the terrorist attacks of September 11 provoked a growth of the South Korean index by 12%. During such periods, investors massively withdraw funds from the US economy and direct them to the shares of the largest financially stable companies (chaebols are among them). Hence the growth of the index at such moments.
Composition of the KOSPI index
Formally, the KOSPI index basket consists of 787 different companies. But given that many of them are subsidiaries of chaebol parent companies, the KOSPI includes so-called "locomotives." These include Samsung, LG, Hyundai, Hynix. Each of the aforementioned financial and industrial groups has dozens of subsidiaries.The largest company has a market capitalization of over 328 trillion won, while the smallest has a market capitalization of under 15 billion won. The top 10 companies in the basket account for over 45% of the weight, and these are the “locomotives” that influence Cospi’s quotes. Samsung Electronics leads the way in terms of weight, accounting for over 20% of the basket’s weight. Hunix is second with a weight slightly exceeding 4.0%.
In terms of sector distribution, the electrical and electronic equipment manufacturing sector ranks first. In total, this sector, as well as the services, finance and chemical industries, account for more than 60% of the basket's weight.
The KOSPI and other sector indices are periodically rebalanced. A committee made up of KRX representatives and other experts is responsible for this and for changing the calculation methodology. The KOSPI documentation does not provide details.
Calculation
The index provider does not provide details of the calculation method of Kospi, the accompanying documentation provides only general formulas for calculating the value of the index. The calculation is carried out according to the dependence of the type:
in this formula:
- CMC is the current market capitalization of the index;
- BMC is the base capitalization;
- BV is the base value, it is taken to be equal to 100 points.
The following notations are used:
- NBMC – New Base Market Capitalization;
- MCPD – Previous Day Market Capitalization;
- CIMC – Change in Current Market Capitalization;
- MCPD – Previous Day Market Capitalization;
- PBMC – Previous Base Capitalization.
Although the index was introduced in early 1983, the base value of 100 points corresponds to January 4, 1980. By the time the main index of South Korea was officially introduced, its quotes exceeded the 120.00 mark.
Recalculation of Cospi values occurs once every 10 seconds. The calculation is carried out in the period from 09:01 to 15:30 South Korea time (GMT+09:00, there is no transition to winter time in South Korea).
KOSPI family
Based on KOSPI, the index provider has released a number of sub-indices, including:KOSPI 200 - is a capitalization-weighted index, the basket of which is built on the basis of the 200 largest companies traded on the South Korean stock exchange. These companies account for over 90% of the capitalization of the country's stock market. Kospi 200 includes 14 sub-indices, most of which characterize individual sectors of the economy.
KOSPI 100 – calculated based on the 100 largest companies included in the Kospi 200 basket.
KOSPI 50 – the basket includes the 50 largest companies by market capitalization from the Kospi 200.
KOSPI LargeCap – an analogue of the S&P 100, the basket includes the 100 largest companies in the country by capitalization
KOSPI MidCap – calculated for companies with medium capitalization; in the capitalization rating they occupy places from 100th to 300th.
KOSPI SmallCap – companies included in the basket are below 300th place by capitalization in the overall ranking.
The live chart shows that most indices have a high correlation with KOSPI.
ETF
There are several ETFs that copy the Kospi index, the main ones are:- ARIRANG KOSPI – the provider is Hanwha Asset Mgt.;
- KODEX KOSPI – it was launched by SAMSUNG ASSET;
- KB KBStar KOSPI ETF – the provider is KB Asset.