An analysis said that if the paid-in capital increase for listing SK hynix's American depositary receipts (ADR) is reflected in the Morgan Stanley Capital International (MSCI) index, Korea could expect a mechanical inflow of more than 1 trillion won through index funds.
Yeom Dong-chan, a researcher at Korea Investment & Securities Co., said in a report on the 5th, "Whether the paid-in capital increase for SK hynix's ADR listing will be reflected will be finalized in the MSCI quarterly review scheduled for the 12th," and added, "If MSCI reflects this, SK hynix's weight in the MSCI emerging markets (EM) index will increase by 0.17 percentage point."
Given that index fund assets tracking the MSCI EM index amount to $593 billion (about 846.0904 trillion won), buying demand from index funds is expected to reach 1.45 trillion won.
However, it viewed the scale as limited relative to market capitalization and trading value. Researcher Yeom said, "It could act positively for supply and demand," but explained, "Considering SK hynix's market capitalization of 1,255 trillion won and its 60-day average trading value of 13.03 trillion won, it is not a large amount."
However, it is uncertain whether the increased number of shares will be reflected immediately in this month's review. This is because MSCI could reflect it in the regular review in Nov., not the quarterly review in Aug. It will be announced at 6 a.m. on the 13th Korea time.