Yuanta Securities Korea said on the 23rd that in the February Morgan Stanley Capital International (MSCI) regular rebalancing, Hyundai Engineering & Construction is highly likely to be added, while LG H&H is likely to be removed from the index. The regular changes will be announced on Feb. 11, with rebalancing on the 27th of the same month.
Ko Kyung-beom, an analyst at Yuanta Securities Korea, said, "Reflecting the recent tendency to finalize the review base date early, Hyundai Engineering & Construction meets the inclusion criteria on all review base dates except on the 22nd of this month."
Ko said, "We see a high likelihood of Samsung Epis Holdings being added, but it does not meet our passive inclusion market cap criterion as of the 21st, and MSCI may have assessed a low free float ratio at the time of Samsung Biologics' partitioning last October." Ko judged that the likelihood is low for candidates such as ABL Bio and Hyundai AutoEver.
Up to two deletions are expected. Ko said, "LG H&H is highly likely to be removed, Coway is at a mid level on the assumption that Samsung Epis Holdings fails to be added, and the likelihood of Doosan Bobcat being removed is low."
In addition, Yuanta Securities Korea projected that in this regular change, LG Uplus will see its inclusion weight reduced as the margin relative to the foreign ownership limit has decreased. The expected selling demand is 56.3 billion won.
Ko said, "Similar to the domestic stock market in January, turnover by individuals and foreigners—including the execution of margin transactions—in MSCI inclusion candidate stocks surged to levels suggesting short-term trading (scalping)," adding, "For the next candidate pool, it is necessary to pay attention to stocks with a market capitalization in the mid-7 trillion won or higher."