Prior to the Morgan Stanley Capital International Korea Index’s May adjustment, South Korea’s securities firms are eyeing whether Hanjin KAL will be able to join the club despite its low liquidity.

Led by a share price rally, the market capitalization of Hanjin Group’s holding company jumped to nearly 5.14 trillion won ($4.21 billion) on Friday, far exceeding the MSCI’s minimum standard for the Korea index, estimated at between 1.7 trillion won and 1.8 trillion won.

But its falling liquidity ratio casts a dark cloud on the prospects of Hanjin KAL’s entry into the MSCI Korea Index, as it has been on sharp decline since late last year. Hanjin KAL’s figure fell to 20.8 percent -- plunging 21.9 percentage points from November last year, said Ko Gyeong-beom, an analyst at Yuanta Securities Korea. The MSCI requires firms to maintain liquidity ratios of at least 50 percent of their total market values.

“Even if the firm is added to the MSCI Korea Index, the figure already reached a dangerous stage. The company may strengthen capital inflow, targeting rebalancing, but it would ramp up volatility risk beforehand,” he said.

While raising expectations on Hanjin KAL joining the index this month based on its market cap, Kim Dong-young, an analyst at Samsung Securities, said it could be removed from the list if its liquidity problem continues to worsen.

“Amid disputes over the management of the firm, its liquidity ratio may further plunge. ... If its liquidity ratio falls below 15 percent, the company will fail to make the list,” he said.

Shares of Hanjin KAL closed at 86,800 won on Friday, after hitting an all-time high of 111,100 won on April 20 when the family feud over management rights reached its peak.

Besides Hanjin KAL, information and communication technology solutions and services provider Douzone Bizon and Celltrion Pharm are expected to make the index.

The share prices of Douzone Bizon and Celltrion Pharm rose 4.39 percent and 1.81 percent to close at 99,800 won and 73,300 won, respectively, Friday.

Meanwhile, biopharma firm Meditox, OCI, HDC Hyundai Development Company, KCC and Hanwha Life Insurance are potential exits, according to local analysts. Amid the gloomy outlook, their stock prices had mixed fortunes on the same day.

Meditox’s stock price spiked 21.99 percent, or 27,600 won, to close at 153,100 won. OCI and HDC Hyundai Development Company’s shares increased 5.67 percent and 0.27 percent to reach 41,000 won and 18,800 won, respectively, at the closing bell.

On the contrary, shares of KCC were flat, closing at 157,500 won, while Hanwha Life Insurance closed at 1,700 won -- down 15 won, or 0.87 percent, from the previous session’s close.

MSCI is set to unveil the results of its biannual index review Tuesday. The rebalancing of the index would take effect on June 1.

By Jie Ye-eun (yeeun@heraldcorp.com)