Go to Contents Go to Navigation

S. Korean bourse operator to launch dividend indices

All News 17:00 October 01, 2014

By Kim Eun-jung

SEOUL, Oct. 1 (Yonhap) -- South Korea's bourse operator said Wednesday it will adopt incentives for bigger dividend payouts and launch new dividend indices to boost the equity market, which has seen an outflow of foreign funds amid the strengthening U.S. dollar against the Korean won.

Choi Kyung-soo, the chairman of the Korea Exchange (KRX), made the pledge as the benchmark index KOSPI fell below 2,000 points for the first time in more than two months on the day. Foreign investors dumped Korean shares as the won fell to the lowest level in six months against the greenback.

"Although long-term foreign funds have stayed, short-term funds are leaving the Korean stock market to make an early exit before the won becomes weaker (against the U.S. dollar)," Choi told reporters. "Korean companies need to increase dividend payouts to make up for the losses from (the exodus)."

The KRX plans to launch three types of dividend indices in late October, which track high dividend stocks, stocks with stable dividend growth and preferred shares. Preferred stocks offer a higher dividend per share than common stocks because they do not come with voting rights and have low turnover rates.

The benchmark index rose sharply in July after new Finance Minister Choi Kyung-hwan released a set of measures aimed at boosting the equity and real estate markets. The policy effect, however, was short-lived because the ascent led by gains in financial and domestic shares lost steam in September due to concerns over weak earnings by market heavyweights.

The KRX will also push to allow in-house trading of equity linked securities (ELS), which are currently traded in the derivatives market, to provide greater options for medium-risk investment.

"Funds have flowed to the ELS with the rising popularity of mid-risk, mid-return products, but ELS products pose a risk as they are over-the-counter financial derivatives," Choi said, stressing the need for listing ELS products.

The KRX operates a centralized securities and derivatives market where derivatives, stocks and bonds are traded on a common platform with flagship KOSPI 200 futures and options.

ejkim@yna.co.kr
(END)

Issue Keywords
Most Liked
Most Saved
Most Viewed More
HOME TOP
Send Feedback
How can we improve?
Thanks for your feedback!