South Korea's KOSDAQ market saw its index fall below 800 to 791.84 on the 16th, marking a 4.53% decline, while daily trading volume dropped to 4.6145 trillion won — the lowest level in approximately 11 months since August 28 last year. The decline was triggered by a sharp drop in semiconductor stocks, with market funds bypassing KOSDAQ companies. Strengthened delisting requirements that took effect this month have placed approximately 350 companies at risk, as 206 firms now have market capitalizations below 20 billion won and 149 trade below 1,000 won per share.
KOSDAQ Implements Strengthened Delisting Criteria
The Korea Exchange introduced stricter delisting requirements this month. Companies are designated as management issues if they remain below thresholds for 30 consecutive trading days. Under the new criteria, firms that fall below the 20 billion won market cap threshold must exceed this level for 45 consecutive days out of 90 trading days to avoid automatic delisting without review. The previous standard required only 10 consecutive trading days and a cumulative 30 trading days above the threshold. The same strengthened criteria apply to stocks trading below 1,000 won.
Profitable Companies Face Delisting Risk Under New Requirements
Financially sound companies are among those at risk under the new criteria. SBI Investment, a venture capital firm, has generated approximately 10 billion won in operating profit for three consecutive years but has traded below 1,000 won since the 23rd of last month. The company's first-quarter operating profit reached 4.9 billion won, up 443.08% year-over-year. Wing Eat Food, a Chinese processed meat producer, recorded a profitable first quarter but has maintained a market cap below 20 billion won for 16 consecutive trading days.
Government Announces KOSDAQ Activation Policies
The government plans to finalize detailed plans for a KOSDAQ promotion and demotion system by year-end for implementation in early next year. The policy framework includes support for high-quality companies and expedited exit procedures for underperforming firms. The government has incorporated a 5% KOSDAQ index weighting into pension fund benchmarks and established a KOSDAQ-specific fund within the National Growth Fund, which has a maximum scale of 200 trillion won. Alteogen, the top KOSDAQ company by market cap, has postponed its KOSPI listing plans in anticipation of improved KOSDAQ market conditions. Yoon Jae-hong, a researcher at Mirae Asset Securities, stated that strengthened regulations on single-stock leveraged ETFs could partially alleviate fund concentration phenomena.
FAQ
What caused the KOSDAQ index to fall below 800 on the 16th?
The KOSDAQ index dropped 4.53% to 791.84 on the 16th due to a sharp decline in semiconductor stocks, with market funds bypassing KOSDAQ companies.
How many KOSDAQ companies face delisting risk under the new criteria?
Approximately 350 KOSDAQ companies face delisting risk, with 206 companies having market capitalizations below 20 billion won and 149 trading below 1,000 won per share as of the 16th.
What government policies has South Korea announced to support KOSDAQ?
The government plans to implement a KOSDAQ promotion and demotion system in early next year, has incorporated 5% KOSDAQ index weighting into pension fund benchmarks, and established a KOSDAQ-specific fund within the National Growth Fund.
