Krafton, Kakao Games likely to join MSCI Korea Index this month

Krafton Inc. and Kakao Games Corp. are expected to join the MSCI Korea Index later this month in semi-annual index review by investment research firm Morgan Stanley Capital International next week.

According to Shinhan Investment Corp. on Monday, Krafton, Kakao Games, F&F, L&F, and Iljin Materials are expected to be newly included in the MSCI Korea Index when the firm announces the results of its semi-annual review on Nov. 12.

Based on past track record, there were more changes in the semi-annual review in May and November than in the quarterly review in February and August.

The review results will be reflected on the index after stock closing on Nov. 30.

Noh Dong-gil, researcher at Shinhan Investment, said that regular rebalancing in MSCI Index usually bodes well for investment mood as it had done in 2020 and 2021.

Krafton – which went public in August – will be the only new stock to join the MSCI Index. It is expected to benefit most from the index fund demand of around 500 billion won.

The demand for F&F is estimated at 144.4 billion won but its impact will be limited due to small trading amount.

Daewoo Shipbuilding and Marine Engineering, meanwhile, is highly likely to be excluded from the index, given the short account on the stock. The ratio of balance in the short account for the stock recently rose to 6.9 percent.

On Tuesday, Krafton shares closed 1.15 percent higher at 483,500 won ($411.42), while Kakao Games finished down 1.71 percent at 86,400 won and DSME 0.58 percent lower at 25,700 won.

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