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Korean Composite Stock Price Indexes – Analysis, Importance & Pricing
Korean Composite Stock Price Indexes (KOSPI) are a series of indexes that follow the total performance of the Korean Stock Exchange as well as the performance of its constituents. Every one of the KOSPI indexes represents a market average that has been capitalization weighted.
These indexes are most well-known for the KOSPI 200, which is comprised of the top 200 publicly traded stocks traded on the Korean Stock Exchange and measures the performance of around 70% of the total market value of the Korean Stock Exchange as a whole.
When investors or traders analyze performance of the Korean Exchange, they often fall back upon to the KOSPI 200 index as guide and indicator to understand the local market trends. The KOSPI 200 is sometimes compared to the international equivalent of S & P 500 in the United States because of this, as well as the fact that its constituents are large-cap stocks.
Korean Composite Stock Price Indexes – What is it?
KOSPI stands for Korean Composite Stock Price Indexes, and it was first introduced in the early 1980s. Since then, several variants have been introduced, including the KOSPI 100, which focuses on mid-cap companies, and the KOSPI 50, which represents small-cap companies.
It also refers to a family of indices that track specific industries such as chemicals and banks, as well as the KODI index, which is focused on dividend-paying stocks. In addition, the KOSPI is displayed on a number of other product lines that track the prices of economic future, options, and sovereign bonds, among other things.
KOSPI – How did it start & its importance?
When the KOSPI 200 index was first issued for trading at the beginning of January in 1983, it had a value of 122.52. With a nominal base value of 100, it was started on January 4, 1980. The period of 1990s saw a dramatic turnaround and the value of the index jumped eightfold to 1,100. This was after the Asian Financial crisis.
The index value has been steady after that period and has shown good growth during almost all periods. In 2011, the value of the index has risen sharply and now touched in the 2,100 mark. By 2021 July, the index is touching 3,300.
Some prominent dates for the KOSPI include June 17, 1988, when it increased approximately 8.5 percent, the largest percentage gain recorded in a single day. The markets also saw a sharp decline after the 9/11 terrorist attack and the index had plunged by 12 percent. It touched 2,000 for the first time on July 24, 2007.
Analysts, market participants, and members of the international financial news media all keep tabs on the KOSPI 200 in varying degrees of detail. All known reporters and publishers from the United States of America regularly quote the KSOPI index while giving feedback of the financial events of Korea.
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