Experts called for aggressive delisting of underperforming companies from the KOSDAQ market, citing an excessive number of listed stocks. They also emphasized that reducing over-reliance on the semiconductor sector is essential for sustaining the KOSPI 5000 era.
"KOSDAQ shows a significant gap between stock price gains and market capitalization growth," Kim Hak-kyun, head of Shinyoung Securities Research Center, said at the "KOSPI 5000 and Beyond" seminar held at Korea Exchange in Yeouido, Seoul, on Friday.
According to Shinyoung Securities analysis, the KOSDAQ index rose 40% from January 2016 to this month, while market capitalization increased 159%. The relatively smaller price gains compared to market cap growth stem from KOSDAQ having nearly twice as many listed companies as KOSPI. This indicates new companies entering the market rather than existing companies seeing share price appreciation.
In contrast, the U.S. Nasdaq posted similar figures over the same period, with stock prices rising 407% and market capitalization increasing 458%.
"Fostering the KOSDAQ market is important, but with around 1,800 listed companies, proper management becomes difficult," Kim said. "We need a process to filter out bad companies."
Economic commentator Yoon Ji-ho also stressed the importance of cleaning up underperforming firms. "The market is undervalued because unnecessary companies, those with information asymmetry, and those that ignore shareholder value remain listed," he said.
Ko Young-ho, director of the Capital Markets Division at the Financial Services Commission, noted that "market capitalization has grown but the index hasn't risen much because existing venture investors rely heavily on IPOs for exits." He added that "the exchange will add a delisting review team this year, which will accelerate the screening process."
For the KOSPI market to sustain the 5000 level, experts identified key conditions including sustained corporate earnings growth momentum, structural changes in Korea's capital market, and continued confidence in U.S. asset markets.
"KOSPI net profit is expected to reach 367 trillion won this year, with Samsung Electronics (005930.KS) and SK hynix (000660.KS) accounting for 51% of that," said Cho Soo-hong, head of NH Investment & Securities Research Center. "Whether the semiconductor industry's growth momentum continues is the most critical factor."
Regarding the recent KOSPI rally, Kim noted that "the price-to-earnings ratio is around 10.1 times and price-to-book ratio remains the lowest globally," adding that "KOSPI 5000 is not unsustainable relative to corporate earnings and asset values."
Korea Exchange Chairman Jung Eun-bo said the exchange would "strengthen market credibility by upgrading surveillance systems using AI technology and enhancing delisting of underperforming companies." He added that KRX would "advance market infrastructure through extended trading hours and shortened clearing and settlement cycles, and lead global liquidity competition through improved dividend procedures."