The KOSPI (Korea Composite Stock Price Index) is a benchmark comprehensive stock price index representing the Korean stock market. It is calculated using a market capitalization-weighted method of the large companies listed on the Korea Stock Exchange.
Established with a base value of 100 on January 4, 1980, the KOSPI rises and falls with the stock price variations of listed companies. Companies like Samsung Electronics, SK Hynix, and LG Energy Solution have significant impacts due to their large scale.
The KOSPI reflects the overall trend of the Korean economy. During economic booms, corporate performance improves, leading to index rises, and during downturns, stock prices fall. This greatly influences the trading sentiment of both domestic and international investors. With increasing foreign investment, global economic issues, interest rate, and exchange rate changes directly and indirectly affect the KOSPI.
The KOSPI serves as a standard for managing domestic stock funds and pension assets. Investors analyze the overall market trends and compare the relative performance of individual stocks through the KOSPI index. Moreover, various derivatives and Exchange Traded Funds (ETFs) are traded using the KOSPI as an underlying index.
For example, the KOSPI 200 is an index of 200 major selected stocks from the KOSPI, based on market capitalization and trading volume. It is used as a standard in the derivatives market for futures and options. Due to its high volatility, the KOSPI index is crucial for the trading strategies of both institutional and retail investors.
The KOSPI bridges the real economy and financial markets. Macro-economic factors such as the Bank of Korea’s monetary policy, government fiscal policy, and interest rate increases by the U.S. Federal Reserve significantly impact index fluctuations. Therefore, the KOSPI is not just a figure but an economic barometer scrutinized by investors and policymakers.
In the long term, it is a means of increasing national assets and serves as a criterion for evaluating corporate value. By entering the KOSPI market, listed companies broaden their capital-raising channels and seize the opportunity to enhance management transparency and social responsibility.
The KOSPI should not be regarded as a mere indicator swayed by short-term fluctuations. It reflects corporate performance and the economic strength, forming the basis for establishing medium to long-term investment strategies. The meaning of the KOSPI as a comprehensive stock price index is expanding beyond an ‘indicator’ to an ‘economic map.’
