LG Innotek (011070.KS) rose nearly 5% during intraday trading after news emerged that the company would be newly added to the MSCI Korea Index. The gain is attributed to expectations of inflows from global passive funds following the announcement. By contrast, shares of LG Display, POSCO International and Samsung Epis Holdings — all removed from the index — turned lower from the previous session.
LG Innotek was trading at 626,000 won, up 22,000 won, or 3.64%, from the previous session as of 2:15 p.m., according to the Korea Exchange. Earlier in the session, the stock climbed close to 5% to touch 643,000 won. LG Innotek had surged to a high of 1.788 million won in early June this year, but the stock lost momentum afterward as the KOSPI weakened broadly.
The gain has been tied to news of the company's new inclusion in the MSCI Korea Index. In announcing the results of its August semiannual review, index provider MSCI decided to add LG Innotek while removing four stocks: HLB, LG Display, POSCO International and Samsung Epis Holdings. Widely regarded as a leading global benchmark, the MSCI index serves as a reference for overseas institutional investors and can channel global passive funds.
LG Innotek's likely inclusion had been anticipated for some time. MSCI adjusts its index constituents through semiannual reviews each February, May, August and November, based on total market capitalization and the value of free-float shares. In a report published on the 8th of last month, Samsung Securities analyst Kim Dong-young said the company's inclusion was highly likely, noting that LG Innotek's market capitalization and free-float market cap clear the MSCI thresholds by a wide margin.
Most of the stocks removed from the MSCI index turned lower. Apart from HLB, which was up 2.4%, LG Display fell 3.16%, POSCO International fell 2.69% and Samsung Epis Holdings fell 1.47% from the previous session.
