Expectations are growing for the newly introduced integrated stock index 'KRX TMI (Total Market Index)' that the Korea Exchange will unveil starting on the 13th of this month. This index encompasses both the KOSPI and KOSDAQ markets and is expected to serve as a more accurate investment indicator, based on the number of floating stocks that are actually traded.
According to the financial investment industry on the 12th, the exchange will publicly announce the KRX TMI starting on the 13th. This index is a composite index calculated based on ordinary shares listed on KOSPI and KOSDAQ that are suitable for index investment, weighted by market capitalization. Similar to those in the United States and Japan, a comprehensive stock index that encompasses the entire stock market is finally being introduced domestically.
Like Japan's 'TOPIX', the KRX TMI helps investors grasp the entire market by integrating various markets and is expected to increase investor interest in the KOSDAQ market, leading to more capital inflow in the long term.
As the number of funds using the KRX TMI as a benchmark increases, high-quality stocks in the KOSDAQ may also be reassessed.
Unlike existing KOSPI or KOSDAQ indices, the KRX TMI filters out stocks unsuitable for investment and is calculated based on the number of floating stocks that can actually be traded. Consequently, some distortions in the stock market caused by stocks with low floating stock ratios and high price volatility are expected to be alleviated.
In the calculation process of the KRX TMI, managed stocks, low liquidity stocks, and suspended transaction stocks are excluded, and stocks held by major shareholders and related persons, as well as treasury stocks, are also excluded from market capitalization calculations. As a result, the number of constituent stocks stands at 2,289, which is fewer than the existing number of constituent stocks in KOSPI and KOSDAQ (2,604).
However, there are concerns that the large number of constituent stocks in the KRX TMI may pose practical challenges for its use as a fund benchmark, similar to KOSPI 200 or KOSDAQ 150 indices. Kim Dong-young, a researcher at Samsung Securities, noted, "Changing the benchmark of existing funds from the KOSPI index to the KRX TMI may take time" and added, "This index announcement clearly demonstrated the exchange's capability and willingness to create a market capitalization-based index."