Kakao Pay and Hanwha Aerospace likely to be added to MSCI Korea Index

South Korea's Kakao Pay Corp. and Hanwha Aerospace Co. next month are expected to get newly incorporated into the MSCI Korean Index, which measures the performance of the large- and mid-cap segments of the domestic market.

Financial investment sources on Thursday said the investment research company MSCI on Feb. 10 will make changes to the index. Kakao Pay and Hanwha Aerospace have been named newly incorporated shares on the stock market.

Shinhan Investment & Securities estimated the market cap of newly incorporated stocks at 4.2 trillion won ($3.4 billion). The floating market cap, or the amount of floating shares multiplied by the market cap, is expected to reach 1.4 trillion won.

As of Wednesday, Kakao Pay's market cap was 8.6 trillion won and floating market cap 1.3 billion won, while the respective figures for Hanwha Aerospace were 3.9 trillion won and 2.5 trillion won. The latter's market cap is lower than the reference point, but its incorporation into the index is highly likely if its stock price continues rising.

The security company S-1, however, is likely to leave the index. Its market cap fell from 2.4 trillion won in July last year to 2.2 trillion won on Wednesday.

Stocks incorporated into the MSCI Korea Index usually see their value rise due to fund inflow from exchange-traded funds abroad that track the index.

Considering continued foreign buying of Kakao Pay and Hanwha Aerospace, analysts predict a not-so-large rise in their stock prices following their incorporation into the index.

Write to Tae-Ung Bae at btu104@hankyung.com