Eyeing Overseas Operation

KRX plans to hold joint cooperation with Nasdaq in listing Chinese companies

Korea Exchange is likely to record 100 billion won in net profit this year, if its projected profit goes as estimated by Credit Lyonnais Securities. The French securities firm in its projection of KRX operation for this year said operating income of KRX would reach 304 billion won and net profit 100 billion won this year. Many foreign investors have been scurrying to buy KRX shares this year. SuNova Capital, for one, contacted the Korean stock exchange officials to inquire about the growth projection for KRX. The U.S. private equity fund has stakes in a number of world stock exchanges including Euronext and has expressed an interest in buying a stake in KRX.
KRX, in the meantime, concluded an MOU with Nasdaq of the United States, which is one of the three top stock exchanges in the world along with the London Stock Exchange and the New York Stock Exchange.
KRX President Lee Young-tak visited the Nasdaq in New York signed the MOU in a meeting with Nasdaq President Robert Greifield at his office Oct.
14 last year, pledging information exchange and cooperation. Nasdaq is the third largest in the world in value and second in transactions. The listed companies include Microsoft, Intel, Cisco, and Oracle, many IT companies and Korean companies listed on Nasdaq include Mirae Asset, Hanaro Telecom, Webzen, Gravity and G-Market, all 7 of them.
KRX plans to provide information on Korean firms listed on Nasdaq and conduct joint marketing and study on stock markets and exchange securities experts under the MOU signed with the U.S. stock exchange. It will also benchmark Nasdaq before launching its IPO this year as the stock exchange conducted IPO in 2002 with a great success.
The Nasdaq president said the MOU is just a beginning, although it is the first MoU that Nasdaq signed with any Asian stock exchange for Nasdaq. We will cooperate in getting Chinese companies listed with the both exchanges, in explaining that there will be significant cooperation between the two exchanges. He said KRX will play an important role as a partner of Nasdaq. Samsung Electronics will be able to offer its shares through Nasdaq and Microsoft will list its shares on KRX at the same time to show a kind of cooperation that can come from the MOU.
Korea Exchange signed a contract to improve the bond dealing system at the Malaysian Stock Exchange with Mohamed Yusoff, president of the Malaysian exchange on Jan. 19 at the Korea Exchange Seoul Office. KRX President Lee Young-tak signed the contract for the Korean side.
Korea Exchange also signed an MOU to set up Cambodia's stock exchange and supervisory department with Dr. Hang chuon Naron at KRX Seoul Office Dec. 21 last year. President Lee Young-tak signed the instrument for KRX.
KOSPI 200 is the underlying index for KOSPI 200 index futures and options and index fund traded in the Korean Exchange(KRX). KOSPI 200 composed of 200 core stocks listed on the Stock Market of the KRX, which covers about 89 percent of total market capitalization of the securities market, was first produced on June 15, 1994 as a market capitalization weighted index.
However, in order to reflect the market condition and reduce the tracking error, the calculation method of KOSPI 200 will be changed from the market capitalization weighted to the free float adjusted method in 2007.
Presently, KOSPI 200 is a market capitalization weighted index and calculated using a Paasche's formula. The constituents of KOSPI 200 are 200 core stocks listed on the Stock Market, which meet the selection criteria based on the market capitalization, trading value and the relative position in the industry group.
The constituents of KOSPI 200 are continually realigned by replacing a constituent stock that fails to satisfy the selection criteria and the stocks of companies de- listed or nonexistent as a result of merger or other corporate changes.
The universe of KOSPI 200 includes all common stocks listed in the Stock Market, excluding the stocks issued by the securities investment companies and the stocks that have not lapsed one year since their initial listing or have been designated as administrative issue. nw

(photo from left) A main trading room of KRX in Seoul. KRX President Lee Young-tak shakes hands with Nasdaq President Robert Greifield after signing an MOU for mutual cooperation and information exchange between their respective stock markets in New York October 14, last year.