The Korea Stock Exchange is South Korea’s only securities exchange operator. Originally it was formed by integrating the Korea Stock Exchange, Korea Futures Exchange and the Korean Securities Dealers Automated Quotations (KOSDAQ.) As of midway through 2022, the Korea Exchange had 2498 companies listed with a total market capitalization of KRW2.443 trillion, or roughly $1,92 billion (USD). Foreign investors are allowed to trade on the Korea Exchange, which is favoured for South Korea’s strong, stable economy and rapid growth rates without restrictions.
South Korea Key Industries
Korea’s open economy exhibits strength in many areas. Firstly, Korea is the fifth-largest automobile manufacturer in the world. Shipbuilding is another major industrial force for the country, with Korean shipbuilders pulling in the second most orders globally for the year. Electronics and the semiconductor industry are booming in Korea. As of December 2021, Korea held a 23% semiconductor market share. Steel is another major commodity for South Korea, with the country placing third for steel exports overall. South Korea’s chemical industry is another major drawcard, as the country ranks fifth in terms of global production as of 2019.
How To Trade On The Korea Exchange
The Korea Stock Exchange trades from Monday to Friday and opens trading at 9 A.M. while closing at 3:30 P.M daily. Investors can either trade the individual stocks of listed Korean companies or invest in bonds, real estate investment trusts (REITs) or exchange-traded funds (ETFs). The Korea Composite Stock Price Index (KOSPI) is a representation of all stocks traded and therefore tracks the overall health of the Korea Stock Exchange. Derivatives are tracked with the KOSPI 200 Index Futures, KOSTAR Futures, and the KOSPI 200 Index Options.
The Korea Composite Stock Price Index (KOSPI)
The Korea Composite Stock Price Index is not an entity that investors can invest in but rather a reflection of the health of the Korea Stock Exchange. One can, however, trade any of the individual companies separately or invest in a related ETF. The top thirty constituents making up the capitalization-weightedKOSPI Index according to market capitalization are:
- Duk San Neolux Co Ltd (213420) – Manufacturing AMOLED materials
- Caregen Co Ltd (214370) – Medical Aesthetics – Skin Biology (Biomimetic Peptide Synthesis)
- Com2uS Corp (078340) – Mobile, Online & Blockchain Game Development
- ABL Bio Inc (298380) – Biotech – Immuno-oncology & Neurodegenerative Diseases
- AfreecaTV Co Ltd (067160) – Content Delivery Network
- HK Inno.N Corp (195940) – Pharmaceutical Research And Manufacturing
- Golfzon Co Ltd (215000) – Computer Systems Design Services (Golf Simulators)
- EnChem Co Ltd (348370) – Manufacturing Of Battery Electrolytes And Additives
- Hana Materials Inc (166090) – Semiconductor Component Manufacturing (Silicon Rings & Silicon Cathodes)
- Daejoo Electronic Materials Co Ltd (078600) – Electronic Component Manufacturing
- Classys Inc (214150) – Medical Equipment Manufacturer (Facial & Body Aesthetics)
- EO Technics Co Ltd (039030) – Laser-Based Technology & Component Manufacturing
- Dongwha Enterprise Co Ltd (025900) – Wood Product Manufacturing (Laminate Flooring)
- Hugel Inc (145020) – Biopharmaceutical Manufacturing
- Barun Electronics Co Ltd (064520) – Electronic Component Manufacturing
- Gradiant Corp (035080) – Advanced Water And Wastewater Treatment Developer (Cleantech Water Projects)
- CNT85 Inc (056730) – Communications Equipment Manufacturing
- Ecopro Co Ltd (086520) – Chemical Manufacturer (Earth Environment & Energy Material)
- Alteogen Inc (196170) – Biotechnology Research And Manufacturing
- Dongjin Semichem Co Ltd (005290) – Semiconductor Chemical Manufacturing
- CJ ENM Co Ltd (035760) – Entertainment & Retail
- Chunbo Co Ltd (278280) – Semiconductor Chemical Manufacturing
- HLB Inc (028300) – Boat Building
- Celltrion Pharm Inc (068760) – Pharmaceutical Research And Manufacturing
- Celltrion HealthCare Co Ltd (091990) – Pharmaceutical Biologics And Chemically Synthesised Drugs
- Charmzone Global Co Ltd (158310) – Printed Circuit Board Manufacturing
- EcoPro BM Co Ltd (247540) – Electrical Equipment And Component Manufacturing
- FiberPro Inc (368770) – Glass And Glass Product Manufacturing
- Hankook Corporation Inc (050540) – Management Consulting Services
- Cape Es No 4 Special Purpose Acquis (347140) – Acquiring And Merging With Growth-Orientated Firms
As one can clearly see, KOSPI is an index dominated by technology, communications equipment and semiconductor manufacturing. Biotechnology and pharmaceuticals also feature prominently. One can see this index as the Korean equivalent of the S&P 500.
KOSPI 200, 100 & 50
The KOSPI 200 is an index that gauges the performance of the top two hundred largest South Korean companies as measured by market capitalization. These enterprises comprise 70% of the total market value of the KOSPI itself, and the index is listed on both futures and options markets. There is also the KOSPI 100 that tracks mid-cap Korean companies, and the KOSPI 50 index-tracking small-cap companies.
KRX 100 Index
The KRX 100 Index was created as an intended successor to the KOSPI 200 despite never quite surpassing its predecessor. It tracks the top one-hundred free-floating shares on the Korea Stock Exchange and cannot be traded directly.
Foreign investors often prefer to invest in exchange-traded funds instead of individual stocks. There are seven ETFs listed in the KOSPI, namely:
- Samsung KODEX KOSPI ETF
- Mirae Asset TIGER KOSPI ETF
- Samsung KODEX 200 ETF
- KIM KINDEX KOSPI ETF
- Hanwha ARIRANG KOSPI ETF
- Samsung KODEX KOSPI Total Return ETF
- Samsung KODEX K-Metaverse Active ETF
Korea Stock Exchange Advantages & Considerations
The Korea Stock Exchange offers several advantages to investors and traders. At an expected growth rate of 3%, according to the International Monetary Fund, the South Korean economy’s rapid growth is a major drawcard. Furthermore, the GDP per capita for the G20-affiliated OECD country falls at approximately $28075 (USD) in 2022, which reflects reliable stability. South Korea’s only investment risks are its reliance on exports and the volatile geopolitical relationship held with its neighbour, North Korea.