The KOSDAQ index has plunged to the 600 level for the first time in one year and three months. It had climbed to 1,226.18 on April 27 this year on expectations for the government's KOSDAQ stimulus measures, but has effectively halved in just three months. As the concentration of funds into the KOSPI market and the launch of single-stock leverage products weakened its supply base, the KOSDAQ has been saddled with the dishonor of its largest single-year drop since the 80-percent-plus crash during the 2000 dot-com bubble.
According to the Korea Exchange on the 29th, the KOSDAQ closed at 662.68, down 43.17 points, or 6.12%, from the previous trading day. It fell to the 600 level for the first time since April 16 last year, reaching the level seen in December 2024 when the martial law situation occurred. During the session, a sell-side sidecar and a circuit breaker were triggered simultaneously, following the previous day. This marks the third time in history that a circuit breaker has been triggered on the KOSDAQ market for two consecutive days, following the 2008 global financial crisis and the 2011 U.S. credit rating downgrade.
Among top market-cap stocks, most declined except for Rainbow Robotics (2.50%), HLB (2.80%), and Pharma Research (4.13%). Only 141 stocks rose, while 1,554 stocks fell. Securities analysts cited insufficient supply and high interest rates as the backdrop for the KOSDAQ's weakness. "KOSDAQ trading value has shrunk to early-year levels," said Jung Hee-chan, a researcher at Samsung Futures. "The period of neglect has been continuing for a long time."
In fact, through the 28th of this month, the KOSDAQ's average daily trading value stood at 6.2178 trillion won, sharply declining after May (15.5661 trillion won) and June (10.0129 trillion won). Over the same period, its trading value share relative to the KOSPI also fell 13.5 percentage points, from 31.0% to 17.5%. On top of this, analysts say that as funding costs have risen amid the rise in global interest rates, the increased cost burden on yet-unprofitable information technology (IT) and bio growth stocks is also diminishing their investment appeal.
The problem is that the trading contraction and worsening investor sentiment have made it difficult for the government's KOSDAQ structural reform plans to take effect. The government is pursuing structural improvements through measures such as strengthening the delisting of troubled companies, disclosing companies with low price-to-book ratios (PBR), and introducing the "KOSDAQ Segment," a system for screening premium companies.
However, concerns are emerging that policy effects could be limited as the index has fallen to the 600 level. "In a market that moves on supply-demand and concentration regardless of valuation, there is little likelihood that policy effects will materialize," said Lee Gun-jae, head of the research center at IBK Investment & Securities. In fact, although the strengthened delisting standards took effect this month, the number of KOSDAQ penny stocks stood at 166 on this day, actually higher than the 159 on February 12 when the measure was first announced. In effect, low-priced stocks increased even though a considerable number of companies undertook stock consolidations.
