The Korea Economic Daily's index set for ETF market debut

Exchange-traded funds (ETFs) have been solidifying their position in the investment market of Korea for the past years. Individual investors in South Korea injected a combined 10 trillion won ($8.3 billion) in ETFs last year. As Korean investors increasingly choose to invest in ETFs in long term these days, the related markets are rapidly expanding. However, several indices dominate the stock markets and the emergence of new indexes is rare.  

Since early last year, The Korea Economic Daily has prepared for its own index creation and will bear the first fruit next week. Mirae Asset Global Investments Co.’s TIGER KEDI Innovator ESG30 ETF, tracking the media outlet’s in-house index, will be on the public market on Feb. 8.

REFLECTING 130 CEOS’ OPINIONS AND ESG ASSESSMENT

The Korea Economic Daily and global market research firm Ipsos Group jointly conduct surveys for 100 chief executives of corporates and another 30 CEOs of asset managers in Korea to select the country’s top 50 innovative companies. Then, the news outlet chooses 30 out of the 50 firms through using an environmental, social and governance assessment model, which The Korea Economic Daily has jointly developed with the country’s Yonsei University and IBS Consulting Company.

Therefore, the index differentiates itself from other indices by reflecting CEOs’ opinions on the stocks and the corporates’ sustainability. It is also an equally-weighted index, based on each company's stock performance having equal importance.

The index, KEDI Innovator ESG30 Index, rebalances annually. It selects stocks in September and adjusts the listing plan in the March of the next year, based on the market situation. The index aims to reflect stock valuation speedily and accurately.

IT	Platform	Future Technology	Bio
Samsung Electronics	Kakao	Hyundai Motor	Celltrion
SK Hynix	Naver	POSCO Chemical	Samsung Biologics
LG Electronics	HYBE	SK Innovation	SK Biopharmaceuticals
Samsung SDI	SK Telecom	Hanwha Aerospace	Hanmi Pharmaceutical
Leeno Industrial	NCSoft	Hyundai Mobis	GC Pharma
LG Innotek	E-Mart	Hanwha Solutions	LegoChem Biosciences
Douzone Bizon	Mirae Asset Securities	Hyosung Advanced Materials	Yuhan
	Netmarble	Soulbrain

(The stocks listed on KEDI Innovator ESG30 Index as of Feb. 6)

The index comprises four sectors - information technology, platform, future technology and bio – which include companies of internet and mobile, future mobility, environment, space, virtual world, gaming, robot, big data, fintech and media.

It currently lists Samsung Electronics Co., Naver Corp., Kakao Corp., HYBE Co., Hyundai Motor Co., SK Biopharmaceuticals Co., Hanwha Aerospace Co., LegoChem Biosciences Inc., Leeno Industrial Inc., LG Innotek Co., Hyosung Advanced Materials Corp., Douzone Bizon Co., Soulbrain Co. and others. The index, which can be found on The Korea Economic Daily’s website in real-time, jumped 76.94% in 2020 and 9.54% last year.

TO BECOME THE FOURTH INDEX PROVIDER OF KOREA

The number of listed ETFs soared from 256 in the end-2016 to 533 in the end-2021. The market capitalization of the ETFs nearly tripled from 25 trillion won to 74 trillion won during the same period. Korea’s daily ETF transactions size ranks No. 3 in the world, following the US' and China's.

However, there are only three index providers in Korea – Korea Exchange, FnGuide Inc. and NH Investment & Securities Co. Indices from Korea Exchange and FnGuide account for 60% of the market while NH and overseas indices make up the rest.

The Korea Economic Daily has become the fourth index provider in Korea, as well as the first Korean news outlet offering market index. After the TIGER KEDI Innovator ESG30 ETF launch, other ETFs on the market for long-term investors are planned as well.

Write to Tae-Hoon Lee and Jin-Hyoung Cho at  
beje@hankyung.com
Jihyun Kim edited this article.