KOSPI

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KOSPI
Kospi-20170713.png
KOSPI performance between 1980 and 2020
Foundation1980; 42 years ago (1980)
ExchangesKorea Exchange
Trading symbol^KS11
Constituents928
Market cap2,254 trillion (July 2021)
KOSPI
Hangul
코스피지수
Hanja
코스피指數
Revised RomanizationKoseupi jisu
McCune–ReischauerK'osŭp'i chisu

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 S&P 500 in the United States.

KOSPI was introduced in 1983 with the base value of 100 as of 4 January 1980. It is calculated based on market capitalization. As of 2007, KOSPI's daily volume is hundreds of millions of shares or (trillions of won).

History[edit]

KOSPI (한국종합주가지수 Hanguk jonghap juga jisu) was introduced in 1983, replacing Dow-style KCSPI (Korea Composite Stock Price Index).[citation needed]

For years, KOSPI moved below 1,000, peaking above 1,000 in April 1989, November 1994, and January 2000. On 17 June 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 12 September 2001, KOSPI had its largest one-day percentage drop of 12.02% (64.97 points) just after 9/11. On 28 February 2005, KOSPI closed at 1,011.36, plunging to 902.88 in April. However, unlike previous bull traps, it kept moving upward, breaking the long-standing 1,000-point resistance level.[citation needed]

In November 2005, the index's Korean name was officially changed to Koseupi jisu (코스피지수).[citation needed]

On 24 July 2007, KOSPI broke 2,000 level for the first time. On 25 July it closed at 2,004.22. On 20 August 2007, the index recovered 93.20 (5.69%), its largest one-day point gain, after the U.S. Federal Reserve lowered the discount rate. On 16 October 2008, the index dropped 126.50 (9.44%), after the Dow Jones Industrial Average dropped 7.87%.[citation needed]

On 23 November 2020, the index broke the record set in 2018 for the first time at 2,602.59 points, after the coronavirus pandemic of 2020 plunged the KOSPI to a low in March.[1]

Record values[edit]

Category All-time highs
Closing 3,305.21 6 July 2021
Intraday 3,316.08 25 June 2021

Starting with 24 February 2020,[2] the index has been dropping continuously during the COVID-19 pandemic. As of 15 March, the KOSPI closed at 1,771.44, prompting the Financial Supervisory Commission to impose a six-month ban on short-selling, the first such drastic action in nearly nine years.[3]

Milestones[edit]

The following is a timeline on the rise of the KOSPI through korean stock market history.

Milestone Date Closing
100 4 January 1980 100.00
200 1 April 1986 200.15
300 21 January 1987 301.93
400 31 March 1987 405.13
500 19 August 1987 500.73
600 26 January 1988 602.32
700 24 May 1988 705.51
800 24 November 1988 805.86
900 12 December 1988 911.35
1,000 31 March 1989 1,003.31
1,100 14 October 1994 1,103.37
1,200 26 September 2005 1,206.41
1,300 1 December 2005 1,305.98
1,400 4 January 2006 1,402.11
1,500 9 April 2007 1,501.06
1,600 11 May 2007 1,603.56
1,700 31 May 2007 1,700.91
1,800 18 June 2007 1,806.88
1,900 12 July 2007 1,909.75
2,000 25 July 2007 2,004.22
2,100 14 January 2011 2,108.17
2,200 25 April 2011 2,216.00
2,300 22 May 2017 2,304.03
2,400 13 July 2017 2,409.49
2,500 30 October 2017 2,501.93
2,600 23 November 2020 2,602.59
2,700 4 December 2020 2,731.45
2,800 24 December 2020 2,806.86
2,900 4 January 2021 2,944.45
3,000 7 January 2021 3,031.68
3,100 8 January 2021 3,152.18
3,200 25 January 2021 3,208.99
3,300 25 June 2021 3,302.84

Annual Returns[edit]

The following table shows the annual development of the KOSPI since 1981.[4][5]

Year Closing level Change in index
in points
Change in index
in %
1981 131.30
1982 128.99 −2.31 −1.76
1983 121.21 −6.03 −7.78
1984 142.46 21.25 17.53
1985 163.37 20.91 14.68
1986 272.61 109.24 66.87
1987 525.11 252.50 92.62
1988 907.20 382.09 72.76
1989 909.72 2.52 0.28
1990 696.11 −213.61 −23.48
1991 610.92 −85.19 −12.24
1992 678.44 67.52 11.05
1993 866.18 187.74 27.67
1994 1027.37 161.19 18.61
1995 882.94 −144.43 −14.06
1996 651.22 −231.72 −26.24
1997 376.31 −274.91 −42.21
1998 562.46 187.31 49.93
1999 1,028.07 465.61 82.78
2000 504.62 −523.45 −50.92
2001 693.70 189.08 37.47
2002 627.55 −66.15 −9.54
2003 810.71 183.16 29.19
2004 895.92 85.21 10.51
2005 1,379.37 483.45 53.96
2006 1,434.46 55.09 3.99
2007 1,897.13 462.67 32.25
2008 1,124.47 −772.66 −40.73
2009 1,682.77 558.30 49.65
2010 2,041.66 358.89 21.33
2011 1,825.74 −215.92 −10.58
2012 1,997.05 171.31 9.38
2013 2,011.34 14.29 0.74
2014 1,915.59 −95.75 −4.76
2015 1,961.31 45.72 2.39
2016 2,026.46 65.15 3.32
2017 2,467.49 441.03 21.76
2018 2,041.04 −426.45 −17.28
2019 2,197.67 156.63 7.67
2020 2,873.47 675.80 30.75
2021 2,977.65 104.18 3.63

Components[edit]

As of July 2021, KOSPI has over 880 components. Top 10 stocks by market capitalization are:

Other indices[edit]

  • 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

KOSPI 200[edit]

The KOSPI 200 index consists of 200 big companies of the Stock Market Division. The base value of 100 was set on 3 January 1990. It has over 70% market value of the KOSPI, and so moves along with the KOSPI index. KOSPI 200 is important because it is listed on futures and option markets and is one of the most actively traded indices in the world. The KOSPI is calculated as current market capitalization (at the time of comparison) divided by base market capitalization (as of 4 January 1980).

That is: Current index = Current total market cap of constituents × 100 / Base Market Capitalization[6]

Its all-time low is 31.96, reached on 16 June 1998, during the financial crisis. It closed above 200 for the first time on 24 April 2007.

KRX 100[edit]

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[edit]

  • 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[edit]

To trade futures and options contracts listed on KRX, a foreign investor may designate custodian banks as standing proxies (through custodian bank agreements and standing proxy agreements to facilitate trading).[citation needed]

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.[citation needed]

See also[edit]

References[edit]

  1. ^ "Kospi hits record 2,602.59 as optimism continues after U.S. election result". koreajoongangdaily.joins.com. Retrieved 16 April 2021.
  2. ^ Huang, Eustance (23 February 2020). "South Korea stocks drop nearly 4% as country raises coronavirus alert to 'highest level'". CNBC.
  3. ^ Kirk, Donald (15 March 2020). "Coronavirus Hits South Korean Markets Despite Easing Of Crisis". Forbes.
  4. ^ "Historical data: KOSPI Index - South Korea (^KOSPI)".
  5. ^ "KOSPI Composite Index (South Korea) Yearly Stock Returns". www.1stock1.com. Retrieved 20 January 2020.
  6. ^ KOSPI 200 weighting methodology via Wikinvest

External links[edit]

Data[edit]