Buoyed by MSCI inclusion, KakaoBank extends gains

A digital signboard on the floor of the Korea Exchange shows the stock market debut of internet-only bank KakaoBank on the KOSPI in Seoul, Aug. 6. Yonhap

By Kim Yoo-chul

Buoyed by an announcement to put KakaoBank on the MSCI Emerging Markets Index list later this month, the online bank operator extended its heavy gains on the country's bourse.

KakaoBank's shares rose 12.46 percent, closing at 78,500 won on the KOSPI, Monday, after rising to the daily limit of 30 percent during the first day of trading last week, according to data provided by the Korea Exchange (KRX), the top bourse operator.

Investors are betting heavily on the growth potential of KakaoBank's business expansion from mobile banking to retail. Plus, inclusion on the MSCI will be a major positive factor in terms of attracting more foreign “passive money,” because the MSCI index is widely used as a barometer to gauge the finances of fast-growing companies in emerging economies. KakaoBank's inclusion in the index is expected on Aug. 20.

“No challenging factors are in sight, and that means I am positive over KakaoBank's additional extension. Its shares should reach the 100,000 won level within the next few days of trading,” a senior fund manager at a U.S.-based investment bank in Seoul said by telephone.

KakaoBank is the country's first digital bank to go public. It was the country's largest initial public offering (IPO) since 2017, when local game company Netmarble went public.

Monday's 12.36 percent addition elevated KakaoBank to Korea's ninth-largest company in terms of assets, as its total capitalization is 37.29 trillion won.

Even retail investors and the national pension fund held off on selling their portions of the shares, despite retail investors having the tendency to sell stocks on the first day of trading for immediate profit-taking.

“Retail investors should be aware that concerns still exist about the stock's steep decline, but its overall business outlook remains strong,” BNK Securities analyst Kim In said.

Founded in 2016, KakaoBank was one of the first companies to snap up one of the online banking permits offered by the government the year before. User numbers grew quickly thanks to KakaoTalk, a messenger service also under Kakao that currently has 46 million active users out of South Korea's population of around 51 million.