Korea Exchange not to apply a 30 percent cap to Samsung Electronics’ market capitalization
Korea Exchange not to apply a 30 percent cap to Samsung Electronics’ market capitalization
  • Jung So-yeon
  • 승인 2020.04.03 11:20
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Korea Exchange has decided not to apply the "30% cap" to the portion of Samsung Electronics' market capitalization in the KOSPI 200 index.

The index business division of Korea Exchange announced on April 2 that it will collect opinions on how to improve the cap on the ratio of the total market capitalization to the KOSPI 200 index and the KRX 300 index.

In its own improvement plan, the exchange suggested a parallel calculation of the index for domestic use that does not apply the cap and the index for overseas use that applies the cap.

In fact, the exchange has decided not to apply a 30 percent cap to Samsung Electronics.
The improvement plan said that the domestic index does not apply the cap system in consideration of changes in the environment, such as easing regulations related to fund management in the domestic capital market.

The exchange's withdrawal of the upper limit was influenced by the financial authorities' revision of the decree.

The revised Enforcement Decree of the Capital Market Act, which went into effect the previous day, calls for allowing ETFs, which follow leading market indices such as the KOSPI 200, to expand the upper limit of inclusion in the same stock from the previous 30 percent to the portion of the index.

A source at Korea Exchange explained, "The purpose of applying the ceiling was to comply with regulations, but the revision of the law also eased the need to apply the ceiling."

Korea Exchange plans to collect opinions from the day to April 22 and make a final decision on the improvement plan after deliberation at the stock index management meeting.

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