South Korea's KOSDAQ market closed at 837.43 on July 10, up 42.42 points (5.47%), yet the index remains below the 1,000-point threshold investors have sought, as the market marked its 30th anniversary on July 1. The small- and mid-cap stock index has underperformed while the main KOSPI board broke through 9,000 points, with investor funds flowing into single-stock leverage ETFs for Samsung Electronics and SK Hynix instead of KOSDAQ listings. The Korea Exchange reported KOSDAQ credit balances stood at 8.1148 trillion won on July 3, one-third of KOSPI's 29.6774 trillion won, reflecting diminished risk appetite for smaller companies. Regulators responded by announcing a segmented KOSDAQ system, accelerated delisting procedures for penny stocks, and mandatory value-up disclosures for technology-track listings.
KOSDAQ Index Performance Lags Behind Listing Growth
The KOSDAQ market opened on July 1, 1996 with 343 listed companies and has grown to 1,819 companies (1,822 listings) as of the article date, representing a 5.3-fold increase in scale. The index started at 100 at launch and was rebased to 1,000 in 2004. The July 10 closing level of 837.43 represents a decline from the rebased starting point, indicating the index has regressed over 30 years despite the expansion in listed entities. The index level returned to levels seen 10 months prior after falling below the 800-point level.
Credit Balances and Trading Volume Decline in KOSDAQ
KOSPI credit balances reached a record 29.6774 trillion won on July 3, approaching the 30 trillion won mark, while KOSDAQ credit balances totaled 8.1148 trillion won on the same date. Daily average trading volume in KOSDAQ dropped to 7.3162 trillion won in July, down from 14.9122 trillion won in January, representing a 50% decline within six months. Total KOSPI trading volume reached 414 trillion won through July 7.
Investor funds shifted to single-stock leverage ETFs tracking Samsung Electronics and SK Hynix at 2x leverage. Sixteen such ETFs launched on May 27 accumulated 361.4903 trillion won in cumulative trading volume through the article date. Market participants attributed the shift to the semiconductor sector's strong performance and the concentration of gains in large-cap technology stocks.
Regulators Announce KOSDAQ Segment System and Delisting Reforms
The Financial Services Commission and Korea Exchange announced plans to introduce a segmented KOSDAQ system that separates high-quality companies into a distinct tier. The segment will be included in pension fund benchmark indices to attract passive investment flows through ETFs. The exchange implemented a promotion-relegation system between segments and simplified delisting procedures for stocks trading below 1,000 won per share or with market capitalizations under 20 billion won.
The exchange began enforcing guidelines in July requiring technology-track listed companies to link value-up disclosure compliance to listing maintenance conditions. Regulators expanded eligibility criteria for technology-track listings to accommodate AI and defense sector companies.
Lee Sang-yeon, a researcher at Shinyoung Securities, stated: "The KOSDAQ market in the second half is likely to enter a phase where earnings and policy work simultaneously, unlike the first half. Profit improvement expectations centered on semiconductor components and materials will support the KOSDAQ index downside, while the materialization of segment separation policy after July can serve as a catalyst to spread investor interest across KOSDAQ."
Na Seung-doo, a researcher at SK Securities, stated: "It will be a factor that improves the soundness of the Korean stock market and raises basic physical strength, and the impact on total market capitalization when delisting is confirmed is virtually insignificant," but added: "Protection measures for investors in over 200 candidate companies in KOSPI and KOSDAQ must also be sufficiently implemented in parallel."
FAQ
What did KOSDAQ stocks close at on July 10?
KOSDAQ closed at 837.43 on July 10, up 42.42 points (5.47%). The index remained below the 1,000-point level despite the gain, with the market having fallen below 800 points in recent sessions and returning to levels seen 10 months prior.
Why did KOSDAQ credit balances decline compared to KOSPI?
KOSDAQ credit balances stood at 8.1148 trillion won on July 3, one-third of KOSPI's 29.6774 trillion won. Investor funds shifted to single-stock leverage ETFs for Samsung Electronics and SK Hynix, which accumulated 361.4903 trillion won in trading volume since launching on May 27, reflecting preference for large-cap semiconductor exposure over small- and mid-cap stocks.
What reforms did regulators announce for KOSDAQ?
The Financial Services Commission and Korea Exchange announced a segmented KOSDAQ system to separate high-quality companies, with inclusion in pension fund benchmark indices planned. The exchange simplified delisting procedures for stocks below 1,000 won per share or 20 billion won market cap, and began enforcing value-up disclosure requirements for technology-track listings in July.
