Value-up index records 3% stock increase

Stocks listed under the Korea Value-up Index, a government component of its Corporate Value-up Program, have averaged a 3 percent increase since it launched last week, according to the Korea Exchange on Sunday. Of the 100 stocks tracked under the index, a total of 80 have shown positive growth.

Such stocks averaged a 2.97 percent fluctuation in closing prices on Tuesday and Friday following the announcement of the index late last Tuesday after the markets closed.

Kosdaq Stocks

The average gain was much larger for Kosdaq stocks than for the bigger KOSPI market. For the 33 Kosdaq stocks, the average return was a 4.11 percent gain while for the 67 KOSPI stocks the return was a 2.38 percent gain.

The KOSPI and Kosdaq indexes notched 0.69% and 0.93% increases, respectively, over the same period, and that, in itself is seen as super-performance for Value-up Index stocks.

This is surprising, however, that small- and mid-cap stocks have been included in the list. While we expected large-cap stocks to be in the list, it is surprising that such stocks would actually result in a major difference in outcome, explained Lee Kyung-min, analyst at Daishin Securities. Lower liquidity of the smaller stocks also made them grow at a higher percentage rate, Lee added.

The highest growth was in the stock of a company specifically focused on green solutions, EcoPro HN, which exhibited a 20.65% increase rate. In immediate succession were Hyosung TNC and Hanjin KAL with 15.95% and 15.38% respectively.

Among the sectors, materials presented the highest growth rate with 5.77%, followed by manufacturing, which came in at 4.44%, followed by information technology at 3.65%, and the communication services sector whose 2.98% translates to an increase. Health care and the energy sectors have slightly declined at 0.05% and 1.45% respectively.

Industry watchers believe that the real influence is on the information technology sector, where the strong performance of Micron in the US is said to have affected major semiconductor companies such as Samsung Electronics and SK Hynix more than the Value-up Index itself.

Stocks in the tech sector rose mainly because there was a positive sentiment over the semiconductor industry after Micron came in with healthy profits that drew foreign investments, Kim Seok-hwan, an analyst at Mirae Asset Securities, said. China’s stimulus measures too supported stock price expansion, he added.

According to Hwang Se-woon, senior researcher at the Korea Capital Market Institute: “I don’t think we should attach too much importance to the rising stock prices in Value-up Index now. More companies in value enhancement processes should enter the index”.