Korea Exchange actively promotes new Value-Up index
The Korea Exchange (KRX) has expanded the functions of the Value-Up index. It now provides real-time updates on the index.
The index is a response to the undervaluation of the Korean domestic stock market. The update took effect on 30 September, and the index stood at 1,007.65 points on the same day. This value-up value is 13.08 points or 1.28% lower than before the update.
Korea Exchange Index overview
The Value-Up index comprises 100 companies whose shares are available to local and foreign investors. The index has a recalculation every second. The base date is 2 January 2024, with an initial 1,000 points.
At the same time, the main stock market indices fell:
– KOSPI 200 declined by 2.5 points or 0.7% to 353.93;
– KOSPI 300 declined by 12.2 points or 0.74% to 1655.62.
The Value-Up index uses five critical criteria:
– market presence, as measured by market capitalisation;
– profitability, measured by net profit;
– shareholder return, which takes into account dividends and share buybacks;
– market valuation, based on the price/book ratio (PBR);
– capital efficiency, which takes into account return on equity (ROE).
Value-up stocks rose by almost 3% on average over the three days, outperforming other indices. For example, the KOSPI rose 0.69%, and the KOSDAQ rose 0.94%.
It is worth noting that the Korea Exchange is interested in strengthening the position of its new index. To this end, it has held meetings with companies whose shares are included in the KOSPI and KOSDAQ. Such events should help familiarise them with the new index’s workings. In addition, the exchange is encouraging companies to disclose more financial information that will help the index perform better.
According to KRX’s Yang Tae-yeung, 28 companies are participating in the disclosure programme. However, this is a relatively low number as the exchange’s initial expectation was for a higher number of participants. As a result, the bourse is considering changing the components of the index. The rationale is to speed up the implementation of companies’ value-enhancing plans.
About the exchange
The Korea Stock Exchange is the world’s largest exchange in terms of derivatives trading volume and ranks among the top 20 global exchanges in terms of market capitalisation. KRX, the result of the merger of three platforms, has been officially in operation since 2005. It is part of a group of brokerage companies and trades equities, futures, and bonds.
