The Korea Exchange (KRX), headquartered in Busan with a major trading floor in Seoul, is South Korea’s sole securities exchange. Established in the early 2000s through the merger of several smaller exchanges, the KRX has grown into one of the largest stock exchanges in Asia and a key player in global markets.
Known for its advanced technology and high trading volume, the KRX provides a wide range of securities, from blue-chip stocks to derivatives. This article will explore the history, structure, key divisions, and global impact of the Korea Exchange.
Daily Movers – Top Korean Stocks
Top Korean Listed Companies
The Korean Stock Exchange is home to a diverse range of companies, with over 2,730 listed firms late 2024. This number can change from time to time, as new firms IPO, and others may delist.
Whilst there are many companies listed, certain stocks get more attention than others. We have highlighted some of the top Korean listed stocks below, but there are many more besides. Depending on your investing or trading goals, there will be certain sectors or trends that might appeal to you more than others.
| Company | Market Cap (As of August 26, 2024) |
|---|---|
| Samsung | $380.64 Billion |
| SK Hynix | $93.28 Billion |
| LG Energy Solution | $66.71 Billion |
| Samsung Biologics | $51.64 Billion |
| Hyundai | $45.83 Billion |
| Coupang | $41.02 Billion |
| Celltrion | $32.08 Billion |
| Kia | $30.38 Billion |
| KB Financial Group | $25.14 Billion |
| Shinhan Financial Group | $22.95 Billion |
Daily Movers – Indices
Demystifying The Korean Stock Exchange
The Korea Exchange (KRX) was established in 2005 through the merger of the Korea Stock Exchange (KSE), Korea Securities Dealers Automated Quotations (KOSDAQ), and the Korea Futures Exchange. The integration aimed to streamline the operations of South Korea’s capital markets and create a centralised marketplace with increased efficiency, liquidity, and regulatory oversight. The roots of the KRX, however, go back much further.
The Korea Stock Exchange (KSE), founded in 1956, was the country’s primary stock exchange. The KOSDAQ, established in 1996, was created to promote the trading of small- and medium-sized technology companies. By merging these platforms, South Korea formed a comprehensive financial exchange capable of handling a broad array of asset classes.
| Aspect | Detail |
|---|---|
| Foundation Year | 2005 (merged as KRX) |
| Market Capitalisation | Over $2 trillion USD (as of 2023) |
| Major Markets | KOSPI Market, KOSDAQ Market, Derivatives Market |
| Notable Milestones | Introduction of KOSPI 200 (1990), Demutualisation (2005) |
Main Markets
KOSPI
The KOSPI (Korea Composite Stock Price Index) Market is the main board of the KRX, where large-cap, well-established companies are listed. Companies on the KOSPI must meet stringent requirements in terms of profitability, governance, and financial disclosures. This market is the most liquid segment of the KRX and accounts for a significant portion of South Korea’s total market capitalization.
The KOSPI 200 is the primary index tracking this market and includes the top 200 companies by market capitalization. It serves as a benchmark for the South Korean stock market and is widely used by both domestic and international investors.
KOSDAQ
The KOSDAQ (Korea Securities Dealers Automated Quotations) Market, similar to the NASDAQ in the United States, focuses on small- and medium-sized enterprises (SMEs) and technology companies. Created to foster innovation and entrepreneurship, the KOSDAQ offers more flexible listing requirements, encouraging high-growth firms to participate in the public markets.
Derivatives Market
The Derivatives Market of the KRX is one of the largest and most active in the world, particularly known for options and futures trading. This market provides products that allow investors to hedge against risk, speculate on price movements, and gain leverage on a variety of underlying assets, including equities, indices, commodities, and interest rates.
The popularity of derivatives on the KRX has positioned South Korea as a major player in the global derivatives market, particularly in Asian markets.
Major Industries on the KRX
The technology and electronics sector dominates the KOSPI, with global giants like Samsung Electronics and SK Hynix leading the way. South Korea is one of the world’s largest producers of semiconductors, displays, and consumer electronics, and these companies are at the forefront of innovation in the technology sector.
South Korea’s automotive industry is another significant component of the KRX, with companies like Hyundai Motor Company and Kia Corporation leading in global vehicle manufacturing. These companies are known for their focus on electric vehicles (EVs), hydrogen fuel cell technology, and autonomous driving research.
The biotechnology sector is well represented on the KOSDAQ, with companies like Celltrion and Samsung Biologics playing major roles in pharmaceuticals and biosimilars production. This sector has seen rapid growth in recent years, as South Korea emerges as a global hub for biotech research and manufacturing.
The entertainment industry is a unique and fast-growing sector on the KRX, with companies like SM Entertainment, YG Entertainment, and JYP Entertainment listed on the KOSDAQ. These companies are behind the global rise of K-pop and contribute significantly to South Korea’s cultural exports, attracting substantial interest from foreign investors.
Innovations
The KRX uses a highly advanced electronic trading platform known for its speed, efficiency, and reliability. This system supports high-frequency trading (HFT) and allows real-time price discovery and liquidity, making the KRX a competitive venue for both domestic and foreign institutional investors.
The exchange has increased its global reach through partnerships with other exchanges and the introduction of dual-listing options, allowing South Korean companies to list internationally. Additionally, the KRX is accessible to foreign investors who can participate in the South Korean market through global brokers, making it an attractive option for those seeking exposure to Asia’s fourth-largest economy.
As environmental, social, and governance (ESG) concerns grow, the KRX has introduced a range of ESG-focused products, including green bonds and sustainability-linked products. The exchange also encourages listed companies to adopt ESG reporting practices, aligning with global trends and attracting investors focused on sustainable and responsible investing.
