KOSDAQ stocks fell to the 800-level on the 3rd, marking a nine-month low since 859.54 on October 17 last year, as the market celebrated its 30th anniversary. The index closed at 868.41 on the 3rd after peaking at 1226.18 on April 27, erasing all gains for the year. Funds shifted to KOSPI amid a semiconductor rally led by Samsung Electronics and SK Hynix, US-Iran ceasefire uncertainties, and won weakness. Margin trading balance for KOSDAQ dropped from 37.1% of total at the start of the year to 21.4% as of the 2nd, while the government introduced a tier system for KOSDAQ listings and strengthened delisting rules for stocks trading below 1000 won for extended periods.
KOSDAQ Index Peaked at 1229.42 on April 27 Before Nine-Month Low
The KOSDAQ index crossed the 1000 level on January 26 at 1064.41, the first time in approximately four years, according to the financial investment industry on the 6th. Two days later on January 28, the index rose to 1133.52, surpassing the 1100 level. After fluctuating, the index recorded its yearly high at 1229.42 during trading on April 27, closing at 1226.18 that day.
The market trend reversed sharply afterward. Uncertainties surrounding US-Iran ceasefire negotiations, won weakness, and a KOSPI rally centered on large-cap semiconductor stocks including Samsung Electronics and SK Hynix drove funds away from KOSDAQ. The index surrendered the 1000 and 900 levels consecutively this month, falling to the current 860 level. The 868.41 close on the 3rd represents the lowest level since 859.54 on October 17 last year, a nine-month low.
Margin Trading in KOSDAQ Fell to 21.4% as of the 2nd
Margin trading data reflects the decline in KOSDAQ. According to the Korea Financial Investment Association, the credit trading balance stood at 37 trillion 718.7 billion won as of the 2nd, with KOSDAQ accounting for 8 trillion 84.3 billion won, or 21.4%. KOSPI accounted for 29 trillion 634.4 billion won, or 78.6%. Credit trading balance represents the amount investors borrowed from securities firms but have not yet repaid, serving as a key indicator of leveraged investment scale.
Total credit balance increased while the KOSDAQ share declined. Credit trading balance rose from 27 trillion 420.7 billion won at the start of the year to approximately 10 trillion won more in six months, but KOSDAQ's share dropped from 37.1% to 21.4%, a 15.7 percentage point decline over the same period.
Analysts note that the shift to KOSPI became more pronounced after the launch of single-stock leveraged exchange-traded funds (ETFs) for Samsung Electronics and SK Hynix. KOSDAQ margin balance turned downward from 11 trillion 50.6 billion won on April 29, falling to 9 trillion 856.3 billion won on May 27, the first trading day for single-stock leveraged ETFs.
Government Introduced Tier System and Delisting Rules for Sub-1000 Won Stocks
The government and Korea Exchange launched market revitalization measures for KOSDAQ's 30th anniversary. They are pursuing the introduction of a tier system that divides KOSDAQ-listed companies into premium and standard categories. Delisting requirements for stocks trading below 1000 won, known as penny stocks, were strengthened. Stocks trading below 1000 won for 30 consecutive trading days will be designated as management issues, and if they fail to recover above 1000 won for 45 or more of the subsequent 90 trading days, delisting proceedings will commence.
Analysts Cite Weak Fundamentals and Fund Concentration in KOSPI Semiconductors
Experts point to both weakened fundamentals and fund concentration as root causes of KOSDAQ's underperformance. Kim Jun-young, researcher at iM Securities, stated, "KOSDAQ has relatively weaker fundamentals compared to KOSPI, and fund concentration is intensifying." He added, "KOSDAQ's advance, which has a high biotech weighting, will only be possible when the concentration in KOSPI's leading semiconductor stocks such as Samsung Electronics and SK Hynix eases."
Lee Jae-won, researcher at Yuanta Securities, explained, "Individual investor funds, which were the core supply entity for KOSDAQ, are leaving." He continued, "KOSPI's earnings estimates are being revised upward centered on semiconductors, while KOSDAQ's earnings improvement pace is limited." He added, "In an interest rate hike phase, KOSDAQ, which has a high growth stock weighting, faces greater burden," and forecast, "An environment where KOSPI has the upper hand in terms of supply, earnings, and interest rates will continue for the time being."
FAQ
What happened to KOSDAQ stocks on the 3rd?
KOSDAQ stocks closed at 868.41 on the 3rd, marking a nine-month low since 859.54 on October 17 last year. The index peaked at 1226.18 on April 27 before falling to the 800-level, erasing all gains for the year.
Why did margin trading in KOSDAQ decline?
Margin trading balance for KOSDAQ dropped from 37.1% of total credit balance at the start of the year to 21.4% as of the 2nd. Analysts attribute this to fund shifts toward KOSPI semiconductor stocks including Samsung Electronics and SK Hynix, particularly after the launch of single-stock leveraged ETFs on May 27.
What delisting rules did the government introduce for KOSDAQ stocks?
The government strengthened delisting requirements for stocks trading below 1000 won. Stocks trading below 1000 won for 30 consecutive trading days will be designated as management issues, and if they fail to recover above 1000 won for 45 or more of the subsequent 90 trading days, delisting proceedings will commence.
