Top 10 largest market cap companies' weight in KOSPI increases - The Korea Times
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Top 10 largest market cap companies' weight in KOSPI increases

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An employee Hana Bank passes by a monitor in the dealing room of the bank's headquarters in central Seoul, Friday. / Yonhap
An employee Hana Bank passes by a monitor in the dealing room of the bank's headquarters in central Seoul, Friday. / Yonhap

By Anna J. Park

The top 10 largest market cap companies' weight in the total KOSPI market cap has seen a massive increase, reflecting rapid industrial changes since the global pandemic has accelerated the Fourth Industrial Revolution as well as digital transformation.

According to the Korea Exchange, the monthly average of top largest market cap companies' weight in the total KOSPI market during August accounted for 44.78 percent, which is about 11.27 percentage points increase from last August's 33.51 percent.

The top 10 market cap companies' combined share increased to 39.34 percent at the end of last year, but it has risen to nearly 45 percent since May this year.

When calculated with the top 15 largest companies' market cap, their weight exceeds over 50 percent of the total market cap of the KOSPI, meaning that the top 15 companies are valued higher than the over 700 other listed companies.

Market watchers say one of the key reasons behind the top companies' increased market weight has to do with particularly bullish moves of the biopharmaceutical industry as well as IT-based digital and contactless companies against the backdrop of COVID-19.

"IT companies based on contactless and digital business models received high valuations, in addition to their enhanced performances during the pandemic spread," said senior analyst Chung Myoung-ji at Samsung Securities. "Their stock prices went higher with their improved guidance, resulting in an increased concentration in the major companies' weight in the total market capitalization."

The pandemic-led economic recession is also benefiting a small number of digital-based companies in their performances, as the market cap gap between companies increases.

"Only a limited number of companies have a bright future outlook in their performances amid the pandemic-led downturn. It is obviously clear to see the differentiated paths between the industries with rosy outlooks and the sectors without such outlooks," said Lee Kyoung-soo, analyst at Hana Financial Investment.

Currently, five companies ― Samsung Electronics, SK hynix, Samsung Biologics, Naver and LG Chem ― have a market cap of over 50 trillion won ($43 billion). For a long time, Samsung Electronics was the only company with over 50 trillion won of market capitalization, and this year marks the first time that the other four companies' market caps exceeded the mark.

Other market insiders point out that it is the result of retail investors' proactive participation in the stock market this year.

"Now is the time when retail investors are much contributing to the rise of the KOSPI index," analyst Lee from Hana Financial Investment said. "Generally, foreign investors and institutional investors have a tendency of diversified investment in their portfolio management, while retail investors tend to more focus on high-performing blue-chip companies."

Market data backs up such claims. The percentage of retail investors' weight in the stock transactions accounted for some 64 percent as of last week, a whopping 16.5 percentage points increase from last year's 47.5 percent. Some of the most purchased stocks of retail investors from mid-March up to last Friday include Samsung Electronics, SK hynix, Naver, Kakao and Samsung SDI ― all within the top 10 market cap companies' list.



Park Ji-won annajpark@koreatimes.co.kr


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