October 30, 2024

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South Korea’s securities exchange operator, the Korea Exchange, said on April 29 that it had removed a market cap limit on the nation’s main bourse, Kospi, lifting a regulatory rule meant to prevent excessive reliance on a single stock.

The 30 percent market cap rule requires securities funds, including exchange-traded funds, to reduce their holdings in stocks that account for more than 30 percent of the market value of the Kospi 200 and KRX 300 indexes. The regulation was introduced in June last year.

KRX Seoul offices (KRX)

The Kospi 200 is a basket of top 200 blue chip stocks in terms of market value, while the KRX 300 is the index of top 300 equities in the main bourse and the secondary Kosdaq market.

“The abolishment of the rule is part of the KRX’s efforts to relax regulations in the stock market,” the exchange operator said.

The 30 percent regulation is largely believed to prevent a single company, tech giant Samsung Electronics in particular, from gaining excessive influence in the stock market. The tech behemoth is considered the only company that can exceed the 30 percent threshold in terms of market cap value in the local market. The KRX assesses the index weight twice a year, every March and November.

By Kim Young-won (wone0102@heraldcorp.com)