The KOSPI is breaking through the 6,500 level to hit a record high, but a "K-shaped market" in which gains are concentrated in a handful of large caps is deepening. As the tilt toward semiconductors intensifies, investors are seeing a widening gap between the rising index and their perceived returns.
As of on the 24th, the combined market capitalization of Samsung Electronics and SK hynix was 2.154 quadrillion won, accounting for 40.6% of the total KOSPI market cap. With the share nearly doubling from 22.2% a year earlier, analysts say the two stocks effectively monopolized the index's gains.
Market liquidity has also been funneled only into large caps. This year, the average daily transaction value for Samsung Electronics and SK hynix was 537.37 billion won and 412.85 billion won, respectively. By contrast, among 949 KOSPI-listed companies, 398 stocks (41.9%) failed to reach even 1 billion won in average daily transaction value. The gap between actively traded names and neglected ones is growing extreme.
The gap by sector is also clear. While the KOSPI rose 54% from the start of the year, the KRX Semiconductors (94.19%), KRX Information Technology (90.51%), and KRX securities (83.75%) indexes, composed mainly of large caps, far outpaced the KOSPI's gain. These indexes are made up of companies such as Samsung Electronics and SK hynix, as well as securities-sector corporations that have benefited from the recent market rally. In contrast, the small-cap-heavy KRX K-Content (-7.48%) and KRX Healthcare (+1.12%) either retreated or barely rose over the same period, forming a stark contrast.
The same divergence shows up in brokerage reports. In April, despite a continued stock rally amid war risks, there were 192 target-price cut reports, far exceeding February (116) and March (68). The share of target cuts out of all reports also climbed from 5.06% in February and 6.09% in March to 12.36% in April, indicating a widening gap between the index and individual stocks.
In a market where a specific sector forcibly pulls up the index, individual investors' perceived returns inevitably plunge. Investors who do not hold leading large caps such as semiconductors feel none of the warmth from the index's rise, and even if they join the rally late, it is structurally hard to earn expected returns due to risks from chasing at the top. The index is setting a record high, but for most investors it is merely "someone else's party," critics say.
Kim Yong-jin, a professor of business at Sogang University, said, "The KOSPI is rising, but as the tilt toward large caps appears, a 'visual illusion' is emerging in which the gap between the index and the market people feel is widening," and added, "Even if you invest in the KOSPI index, the result is similar to investing essentially in two corporations, Samsung Electronics and SK hynix, so portfolio strategy has become virtually meaningless."
Meanwhile, the gap between the KOSPI and KOSDAQ markets is also widening. KOSDAQ is up 30% from the beginning of the year, about half the KOSPI's 53% gain.
Lee Hyo-seop, a senior research fellow at the Korea Capital Market Institute, said, "Ultimately, a long-term upward momentum can be secured only if many foreign and institutional investors come in," and noted, "To make investors perceive it as an attractive market, authorities should strengthen sanctions on companies with insincere disclosures or facilitate delistings to improve market soundness."