An Update of the Potential KOSPI200 Rebalance Candidates in June 2024

• We provide an update of the potential KOSPI200 rebalance candidates in June 2024.

• The bottom 5% market caps in KOSPI200 could be excluded from the KOSPI200 rebalance in June 2024. These 10 stocks are down on average 12.6% YTD.

• We identified seven potential inclusion candidates. Among them, those that have low PBR multiples including HHI and Dongwon Industries could continue to outperform the market leading up to rebalance announcement.

In this insight, we provide an update of the potential KOSPI200 rebalance candidates in June 2024. In the past several years, there have been a lot of alpha generating stocks arising from the KOSPI200 rebalances. Given this fact, investors have been positioning this KOSPI200 rebalance earlier, several months prior to the actual event.

There are two rebalance dates for KOSPI200 (June and December). The review period for the June rebalance occurs in May, using the data (such as free float based market cap and trading value) as of end of April for the listed common stocks in KOSPI. The announcement of the KOSPI200 rebalance occurs sometime from mid-to-late May.

Potential Exclusions in KOSPI200 Rebalance in June 2024

The table below provides a list of 10 stocks that are in the bottom 5% market caps in KOSPI200. These 10 stocks are among the higher probability companies that could be excluded from the KOSPI200 rebalance in June 2024.

We believe that these 10 stocks on average could underperform KOSPI leading into the rebalance in June 2024. The average market cap of these 10 stocks is 705 billion won. These 10 stocks are down on average 12.6% YTD, underperforming KOSPI which is up 1.4% in the same period.