KOSDAQ Outperforms KOSPI in Year-End Rally; Pattern Expected to Continue

Market observers are watching whether the pattern of KOSDAQ outperforming KOSPI during year-end and early-year periods will repeat in 2025.

Data from Korea Exchange and Samsung Securities show that KOSDAQ, the tech-heavy secondary board, has posted higher average monthly returns than the main KOSPI index during December, January, February, and March since 2010.

In December 2024, KOSDAQ gained 1.66% while KOSPI rose 1.09%. The trend continued in January, with KOSDAQ climbing 1.13% compared to KOSPI's 0.51%. February showed an even wider gap, with KOSDAQ returning 1.32% versus KOSPI's 0.13%. In March, KOSPI posted a 1.14% gain but still trailed KOSDAQ's 1.71%. From April through November, however, KOSPI's average monthly returns exceeded those of KOSDAQ.

Industry analysts point to investor composition as the primary driver of this seasonal pattern. Foreign investors concentrate their trading in large-cap stocks on the main board, leaving the retail-dominated KOSDAQ relatively insulated from their selling pressure.

"Foreign hedge funds appear to be rebalancing their emerging market portfolios, including Korean equities, where they've booked profits since year-end," said Kim Tae-hong, CEO of GrowthHill Asset Management.

In December 2024, foreign investors were net sellers of 3.04 trillion won on the main board while net buying 719.5 billion won on KOSDAQ. In November, foreigners recorded a record net sell-off of 14.46 trillion won on KOSPI but purchased 290.1 billion won worth of KOSDAQ stocks.

Major events concentrated in early January also contribute to KOSDAQ's outperformance. CES, the world's largest technology trade show, and the JP Morgan Healthcare Conference draw attention to sectors heavily represented on KOSDAQ. Robotiz (108490.KQ), a KOSDAQ-listed robotics company, surged 60% in January 2024, rising from 26,500 won to 42,350 won.

"Major events related to biotech and robotics stocks, which have significant weight on KOSDAQ, are concentrated at the start of the year," said Shin Seung-jin, head of investment information at Samsung Securities.

Securities analysts expect this pattern to continue in 2025, given ongoing foreign selling pressure on the main board.