The KOSDAQ market, launched with the U.S. Nasdaq as its model, marks the 30th anniversary of its opening on the first day of next month. Yet far from a celebratory mood, only the sighs of investors can be heard. While the KOSPI has held above the 8,000 level despite recent sharp swings, the KOSDAQ has plunged feebly below the 900 mark. As polarization has deepened, KOSDAQ's share of the total stock market capitalization has fallen to its lowest level in 27 years.
On the 26th, KOSDAQ's market capitalization fell to 478 trillion won, even surpassed by domestic exchange-traded funds (ETFs), whose net assets have topped 500 trillion won. This makes a mockery of its founding purpose to serve as a cradle for venture and innovative companies. The expectation that it would broaden investors' choices through competition with the KOSPI market and act as a driving force to invigorate the overall stock market has long since vanished. Due to companies' poor earnings, the exodus of individual investors, and the transfer of blue-chip companies to KOSPI listings, the KOSDAQ market has now been reduced to being treated as a "second-tier league."
The KOSDAQ market's slump is largely attributable to investors flocking to semiconductors such as Samsung Electronics and SK hynix while turning their backs on small- and mid-cap stocks in bio and materials sectors. But more fundamentally, the root cause is a shortage of promising companies. For example, while Korea's semiconductor industry boasts world-leading status, the localization rate for semiconductor materials stands at just 30 percent and equipment at only 10 percent. If the materials, parts, and equipment companies that form the backbone of KOSDAQ fail to grow evenly, the dream of "3,000-daq" will be nothing but a mirage.
Revitalizing the KOSDAQ market is a task that cannot be delayed any longer, if only for the Lee Jae-myung administration's pledged "grand transformation into a startup-centered society." The government and the Korea Exchange are also embarking on a so-called "KOSDAQ overhaul," including tightening criteria to delist so-called "penny stocks" and pursuing the introduction of a premium-company-centered "promotion and relegation system." The aim of reorganizing KOSDAQ around qualitative growth is commendable. But while delisting marginal companies is necessary, discovering and nurturing promising ventures through the creation of an innovation ecosystem is more important. The government must open a growth ladder so that startups and small and medium-sized enterprises can leap forward, through deregulation such as applying exceptions to the 52-hour workweek system. Only then can a new industry ecosystem where innovation and challenge are rewarded come alive, and the KOSDAQ market's competitiveness be restored.
