Alteogen, a KOSDAQ bellwether, has decided to transfer list to the main board. Although a warm breeze is blowing through the relatively neglected KOSDAQ as the index has been rising recently, the repeated trend continues of bellwethers with large weights in market capitalization transferring their listings to the KOSPI. With the government preparing measures to support the KOSDAQ, attention is on whether they can be a breakthrough.
According to the Korea Exchange (KRX) data system on the 8th, Alteogen's market capitalization (24.5057 trillion won) accounts for 4.9% of the total KOSDAQ market capitalization (500.1269 trillion won). If Alteogen transfers its listing to the KOSPI, about 5% of the KOSDAQ market cap will be removed.
In this situation, Alteogen confirmed the transfer to the KOSPI on the day. At an extraordinary shareholders' meeting held that morning at the Daejeon Convention Center in Daejeon, the company approved an agenda item titled "Conditional delisting from the KOSDAQ and resolution to transfer list to the main board."
If Alteogen, which has a large market-cap weight, moves to the KOSPI, it could weigh on future KOSDAQ index gains. Earlier, when Celltrion transferred to the KOSPI on Feb. 9, 2018, about 33 trillion won in KOSDAQ market cap was removed at once, and the KOSDAQ index later fell into the 600s amid the fallout from the U.S.-China trade dispute. The transfer of KOSDAQ bellwethers to the KOSPI has been repeated in the past. Celltrion (2018) and Kakao (2017) are representative cases, and a total of 16 listed companies have moved from KOSDAQ to KOSPI over the past 10 years.
Most choose the KOSPI because they judge that they are not sufficiently valued on the KOSDAQ. Alteogen also disclosed that the purpose of this transfer listing is "to enhance corporate value by creating a stable investment environment."
Lee Jun-seo, a professor of business administration at Dongguk University, said, "In the case of the KOSPI, it is much easier to attract investment than the KOSDAQ and to support the stock price," and added, "By contrast, the KOSDAQ has many side effects from unfair trading, so investors often shun it from a soundness standpoint."
In particular, the effects of passive inflows through exchange-traded funds (ETFs) and the like cannot be ignored. An official in the financial investment industry said, "The amount of passive funds flowing into the KOSPI and KOSDAQ differs, so from corporations' perspective, they cannot help but consider a transfer listing to support their stock prices."
As word spreads that the government is preparing stimulus measures to revitalize the KOSDAQ, some say the market itself must be strengthened as much as efforts to draw funds toward the KOSDAQ. In the industry, there is speculation that the government may unveil support measures to invigorate the KOSDAQ, such as strengthening tax benefits for individual investors and the national pension fund.
Professor Lee analyzed, "Under the current system, transfer listings are bound to be repeated," adding, "The KOSDAQ system needs to be overhauled across the board to build a structure that can move into a competitive regime with the KOSPI."
Meanwhile, Alteogen is expected to submit a preliminary listing review application to the Korea Exchange (KRX) for the main board and, after going through the listing process, list on the KOSPI sometime next year.