Kakao Pay set to join MSCI Index in February

Officials from the Korea Exchange, brokerage houses and Kakao Pay celebrate the mobile payment firm's listing on the benchmark KOSPI, at a Seoul office of the exchange, Nov. 3, 2021. Joint Press Corps-Yonhap

By Lee Min-hyung

Kakao Pay is forecast to join the MSCI Index in February, as the company has met the key criteria for its long-awaited inclusion in the global equity index, market analysts said Monday.

The MSCI Quarterly Index Review will be announced on Feb. 9. The requirements for the inclusion are stocks with a total market capitalization of more than 2.6 trillion won and a float market capitalization of over 1.3 trillion won.

The mobile payment service operator will be able to join the index, as it meets both of the standards due to a recent stock recovery. Kakao Pay's total market capitalization reached 8.9 trillion won as of Monday, and its float market capitalization also came in at around 1.6 trillion won.

“Kakao Pay has met both standards on its recent stock rebound,” Huh Yul, an analyst at NH Investment & Securities, said. “The company will be included during the upcoming index review unless its stock price drops by more than 15.5 percent from the current level.”

The securities firm also expected Kakao Pay to enjoy an additional capital inflow of around 82.5 billion won after its inclusion in the index.

Kakao Pay was frequently mentioned as a candidate for inclusion in the MSCI Index after it went public in November 2021. But it has so far failed to do so, as its stock price suffered a sharp decline up until recently.

Kakao Pay was traded at around 67,000 won per share as of Monday. The firm's stock price soared to a historic high of around 230,000 won soon after the listing in late 2021, but has since been on a drastic downward trajectory, hit hard by the current market doldrums and a series of moral hazards scandals among its top management.

However, starting from 2023, the company has been rapidly recovering its valuation as, in addition to its possible inclusion in the MSCI Index, it is believed that the stock has already hit rock bottom and can only improve going forward.

A total of 10 stocks were excluded in the latest MSCI review in November.

“But not a single stock here will be excluded from the index during the upcoming review,” the analyst said.