MSCI announces its August Korea Index rebalancing results on the morning of August 13 (Korean time), with the Korean securities industry focusing on which stocks will be added or removed. The index, one of the world's major benchmarks, adjusts its constituents quarterly in February, May, August, and November based on market capitalization and float-adjusted market capitalization, with inclusion triggering passive fund inflows. Market volatility has intensified speculation as analysts project at least one new addition this cycle, contrasting with May's zero-addition outcome that saw three deletions reduce the index from 80 to 77 stocks.
LG Innotek Leads Addition Candidates with 14.792 Trillion Won Market Cap
LG Innotek is the most likely new addition candidate. Its market capitalization stood at 14.792 trillion won as of the May 24 closing price, exceeding the cutoff market cap of approximately 11.5 trillion won cited for this rebalancing cycle. Kim Dong-young, a Samsung Securities researcher, stated that "LG Innotek's market capitalization and float-adjusted market capitalization both significantly exceed the inclusion criteria, making its inclusion probability very high."
Beyond LG Innotek, brokerage forecasts diverge on secondary candidates. Daol Investment Securities named LS and Samsung E&A as additional inclusion candidates, while Shinhan Investment Securities cited LG CNS and Hyundai AutoEver.
HLB Faces Highest Deletion Risk After 40% Stock Price Drop
LG Display, POSCO International, and Samsung Epis Holdings are commonly cited as deletion candidates due to recent stock price adjustments reducing their market capitalizations. HLB's deletion probability is assessed as highest among current constituents. The stock plunged 40% this month, shrinking its market cap from 6.926 trillion won at the end of last month to 4.169 trillion won as of May 24.
Kim Dong-young explained that "HLB has the lowest market capitalization among current constituents, making its deletion probability highest. POSCO International, Samsung Epis Holdings, and LG Display also face deletion possibilities." Daol Investment Securities included Yuhan Corporation instead of HLB in its deletion candidate list.
Brokerage Firms Cite Market Volatility as Forecast Challenge
Analysts noted that recent market volatility has complicated rebalancing forecasts compared to prior cycles. Kim Dong-young stated, "Market volatility has increased recently, causing expected stocks to continuously change." The May rebalancing removed Hanjin KAL, HD Hyundai Marine Solution, and SK Biopharm with no new additions, reducing the MSCI Korea Index from 80 to 77 stocks.
Securities firms observe that stocks expected for inclusion typically show strength ahead of rebalancing due to anticipation, while expected deletions may weaken on supply outflow concerns. Kim noted, "LG Innotek has undergone stock price adjustment over the past month or two, so inclusion expectations are not yet fully reflected. Additional upside is possible if related news continues." He added, "Stocks expected for deletion may have further downside room remaining."
FAQ
When does MSCI announce the August Korea Index rebalancing results?
MSCI announces the August rebalancing results on the morning of August 13 (Korean time).
Which stock is most likely to be added to the MSCI Korea Index in August?
LG Innotek is the most likely addition candidate, with a market capitalization of 14.792 trillion won as of May 24, exceeding the cutoff of approximately 11.5 trillion won.
Why is HLB considered the top deletion candidate?
HLB's stock price fell 40% this month, reducing its market cap from 6.926 trillion won at the end of last month to 4.169 trillion won as of May 24, making it the lowest among current MSCI Korea Index constituents.
