While the recent KOSPI rally has stalled, retail investor flows have shifted to the KOSDAQ, sharply increasing KOSDAQ transaction value this month.
According to the Korea Exchange (KRX) on the 28th, the KOSDAQ's average daily transaction value from the 1st to the 26th of this month was 11.48 trillion won. On a monthly basis, that is the highest in 2 years and 4 months since Aug. 2023 (12.122 trillion won). It jumped 21% from last month (9.479 trillion won).
By contrast, KOSPI market transaction value fell noticeably over the same period. The KOSPI's average daily transaction value from the 1st to the 26th of this month was 14.461 trillion won, down 17% from last month (17.433 trillion won).
"Changing hands" in the KOSDAQ market is also becoming active. From the 1st to the 26th of this month, the KOSDAQ's average daily turnover ratio was 2.3%, up 15% from the prior month (2%). This contrasts with the KOSPI's average daily turnover ratio over the same period, which fell 19% from 0.53% to 0.43%.
The turnover ratio is the ratio of transaction value to market capitalization; the higher the figure, the more frequently trades occurred among investors.
Recently, volatility has widened in the KOSPI market amid talk of an artificial intelligence (AI) bubble, weighing on sentiment. After hitting an intraday record high of 4,226.75 on the 4th of last month, the KOSPI has failed to set a new high for about two months.
Meanwhile, in the KOSDAQ market, as media reports continued that the government is preparing measures to revitalize the KOSDAQ, expectations for "Cheonsdaq" (KOSDAQ at 1,000) spread, which appears to have drawn in buying.
In particular, retail investor funds moved from the KOSPI to the KOSDAQ. From the start of the month to the 26th, retail investors were net buyers of 626 billion won in the KOSDAQ market, while they were net sellers of 9.797 trillion won in the KOSPI market. This is the exact opposite of last month, when retail investors were net sellers of 480 billion won in the KOSDAQ and net buyers of 9.287 trillion won in the KOSPI.
Experts advise that with expectations for government policy support still in place, the KOSDAQ market merits attention for the time being. They note that the Public Growth Fund, which invests in advanced industries such as biotech and secondary batteries, was recently launched, and that securities firms' integrated managed accounts (IMA) could also have a positive impact on the KOSDAQ market.
Tae Yoonsun, an analyst at KB Securities, said, "With the IMA system for securities firms introduced in November, an inflow of funds into small and mid-cap stocks is expected," citing the fact that "IMAs are required to invest a certain portion of raised funds in venture capital, with the ratio to be raised in stages to 10% next year, 20% in 2027, and 25% in 2028."
She added, "Based on the KOSDAQ market's seasonality, which typically shows strength in January to February, policy momentum, and the potential push to revitalize the KOSDAQ, gains are expected in the KOSDAQ market, which has been relatively overlooked."
The KOSDAQ's lower rise compared with the KOSPI this year is also cited as a factor raising expectations for further gains. Since the start of the year, the KOSDAQ index is up 36%, about half the KOSPI's rise (72%) over the same period.
Na Jeonghwan, an analyst at NH Investment & Securities, said, "Amid expectations for KOSDAQ revitalization policies, the KOSDAQ index is showing an upward trend, but there is still a performance gap with the KOSPI index," adding, "If the government's restructuring of listing and delisting rules and policies to attract institutional investors gain traction, the KOSDAQ index's upside potential is expected to expand."
However, import price pressures from a rising exchange rate and uncertainty over domestic interest rate cuts are cited as factors restraining further gains in the KOSDAQ. Lee Ungchan, an analyst at iM Securities, noted, "In a situation where improvements in domestic demand or interest rate cuts are not becoming visible, it is not easy to simply expect the KOSDAQ or small and mid-caps to outperform."