|Revised Romanization||Koseupi jisu|
The Korea Composite Stock Price Index or KOSPI (코스피지수) is the index of all common stocks traded on the Stock Market Division—previously, Korea Stock Exchange—of the Korea Exchange. It is the representative stock market index of South Korea, like the Dow Jones Industrial Average or S&P 500 in the U.S.
KOSPI was introduced in 1983 with the base value of 100 as of January 4, 1980. It's calculated based on market capitalization. As of 2007, KOSPI's daily volume is hundreds of millions of shares or (trillions of won).
KOSPI (한국종합주가지수 Hanguk jonghap juga jisu) was introduced in 1983, replacing Dow-style KCSPI (Korea Composite Stock Price Index).
For years, KOSPI moved below 1,000, peaking above 1,000 in April 1989, November 1994, and January 2000.
On June 17, 1998, KOSPI recorded its largest one-day percentage gain of 8.50% (23.81 points), recovering from the bottom of the Asian financial crisis.
On September 12, 2001, KOSPI had its largest one-day percentage drop of 12.02% (64.97 points) just after 9/11.
On February 28, 2005, KOSPI closed at 1,011.36. It then plunged to 902.88 until April. But unlike previous bull traps, it kept moving upward breaking the long-standing 1,000 point resistance level.
In November 2005, the index's Korean name was officially changed to Koseupi jisu (코스피지수).
On July 24, 2007, KOSPI broke 2,000 level for the first time. On July 25 it closed at 2,004.22.
On August 20, 2007, the index recovered 93.20 (5.69%), its largest one-day point gain, after the U.S. Federal Reserve lowered the discount rate. Then on October 16, 2008, the index dropped 126.50 (9.44%), after the Dow Jones Industrial Average dropped 7.87%.
As of July 2012, KOSPI has over 780 components. Top 10 stocks by market capitalization are:
- Samsung Electronics (005930)
- Hyundai Motor (005380)
- POSCO (005490)
- Kia Motors (000270)
- Hyundai Mobis (012330)
- LG Chemical (051910)
- Samsung Life Insurance (032830)
- Hyundai Heavy Industries (009540)
- Shinhan Financial Group (055550)
- Korea Electric Power (015760)
- KOSPI 200, KOSPI 100, and KOSPI 50
- LargeCap, MidCap, and SmallCap indices based on market capitalization
- KOGI corporate governance index
- KODI dividend index
- Industry indices like chemicals, electrical & electronic equipments, transport equipment, or banks.
- KRX 100 and other KRX indices which take into account both stock markets of Korea Exchange (KRX) — Stock Market Division and KOSDAQ Division
The KOSPI 200 index consists of 200 big companies of the Stock Market Division. The base value of 100 was set on January 3, 1990. It has over 70% market value of the KOSPI, and so moves along with the KOSPI index. KOSPI 200 is important because it's listed on futures and option markets and is one of the most actively traded indexes in the world. The KOSPI is calculated as current market capitalization (at the time of comparison) divided by base market capitalization (as of January 4, 1980).
That is: Current index = Current total market cap of constituents × 100 / Base Market Capitalization
Its all-time low is 31.96, reached on June 16, 1998 during the financial crisis. It closed above 200 for the first time on April 24, 2007.
KRX 100 is the index of 100 companies listed on Korea Exchange, including KOSDAQ's big companies. It's meant to replace KOSPI 200 as the key futures index, but has not been very successful to date.
KRX derivatives products
- Stock Index Products: KOSPI 200 Futures, KOSPI 200 Options, STAR Futures
- Individual Equity Products: Individual Equity Futures, Individual Equity Options
- Interest Rate Products: 3 Year Korea Treasury Bond Futures(KTB3), 5 Year Korea Treasury Bond Futures(KTB5), 10 Year Korea Treasury Bond Futures(KTB10), MSB Futures
- Currency Products: USD Futures, USD Options, Japanese Yen Futures, Euro Futures
- Commodity Products: Gold Futures, Lean Hog Futures
Investment procedures for foreigners
To trade futures and options contracts listed on KRX, a foreign investor may designate custodian banks standing proxy) through custodian bank agreement and standing proxy agreement to facilitate operations related to futures and options trading.
A custodian bank as a standing proxy opens accounts at foreign exchange banks and futures companies, deposits and withdrawals investors' money and monitors investors' properties for them. A foreign investor should designate foreign exchange banks through a foreign currency exchange agreement to execute his foreign exchange transactions and transfers. Most foreign exchange banks also do custodian bank and standing proxy operations. A foreign investor should designate securities and futures companies to trade futures and options traded on KRX.