With volatility rising in the domestic stock market after U.S. and Israeli airstrikes on Iran, household funds are flowing en masse into the KOSDAQ market. Experts said that in a phase where market volatility expands due to geopolitical risks, KOSDAQ can show high volatility, so various factors such as future supply-demand patterns and policy direction should be considered together.
According to the Korea Exchange (KRX) on the 9th, during the 3rd–4th when the KOSPI plunged nearly 20% after the U.S. and Israel struck Iran, individual investors made a net purchase of about 176.3 billion won in the KODEX KOSDAQ 150 exchange-traded fund (ETF). During the same period, the KODEX KOSDAQ150 Leverage ETF, which tracks the KOSDAQ index at twice the rate, saw purchases of 886.6 billion won.
On the 5th, as the KOSPI and KOSDAQ indexes surged, there were also signs of profit-taking, with 113.1 billion won worth of KODEX KOSDAQ 150 sold.
Kang Song-cheol, a researcher at Eugene Investment & Securities, said, "Over the past two months, the KOSPI rose by nearly 50%, while the KOSDAQ climbed relatively less, and expectations for government policies to invigorate the KOSDAQ market appear to have fueled KOSDAQ buying."
Kim Jun-young, a researcher at iM Securities, said, "The longer geopolitical risks persist, the more the existing leading stocks on the KOSPI tend to take a breather," adding, "Bio and secondary batteries on the KOSDAQ market, which have been relatively less prominent, can be alternatives from a supply-demand perspective."
Within the KOSDAQ market, funds are also flowing into corporations with competitiveness. The KOSDAQ Global Index, which selects and composes more than 50 corporations among KOSDAQ-listed companies that meet certain standards for market capitalization, corporate soundness, and governance, has risen sharply recently.
Since its launch on Nov. 18, 2022, the index's cumulative return stood at 138.6% as of the 5th. This performance far outpaces the gains of the KOSDAQ (52.5%) and the KOSDAQ150 index (88.9%) over the same period.
Included here are EcoPro, Alteogen, and EcoPro BM, which are in the top market-cap group.
There was also analysis that the KOSDAQ still has room to rise. Kim Byung-yeon, a researcher at NH Investment & Securities, said, "The long-term average price-to-book ratio (PBR) gap between the KOSPI and KOSDAQ is 0.6 times, while in past KOSDAQ activation policies and liquidity-driven markets, the difference was 1.4 times," adding, "Based on the KOSPI and the PBR gap, the target PBR for the KOSDAQ index is 3.4 times, which converts to 1,500 points for the index."
Researcher Kim also said, "The market is projecting the KOSPI up to 7,000 points, which would require about a 20% rise from the current 5,600 points," adding, "In that case, the KOSDAQ market also has about 30%–35% upside from a 'level matching' perspective." Based on the current KOSDAQ of about 1,100 points, there is room in the long term to rise to 1,400–1,500.
However, there are also cautions that if expectations for policy weaken or the earnings of key sectors fall short, a steep correction could occur. Kim said, "After events like elections pass, the policy drive can weaken, so the market is hoping the policy uncertainty will be resolved before then."