The KOSPI has broken through the 6,500 level to set a record high, but a "K-shaped market" in which gains concentrate in a few large-cap stocks is intensifying. As the tilt toward semiconductors strengthens, investors are also seeing a widening gap between index gains and their perceived returns.
As of on the 24th, the combined market cap of Samsung Electronics and SK hynix was 2,154 trillion 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 rise.
Market liquidity also flowed only into large caps. This year, the average daily transaction value for Samsung Electronics and SK hynix was 5.3737 trillion won and 4.1285 trillion won, respectively. By contrast, among 949 KOSPI-listed companies, 398 stocks (41.9%) had an average daily transaction value of less than 1 billion won. The gap between actively traded stocks and those left out is growing stark.
The gap by industry 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 gains. These indexes are made up of Samsung Electronics, SK hynix, and securities-sector companies that have benefited from the recent market rally. By contrast, the small-cap-heavy KRX K-Content (-7.48%) and KRX Healthcare (+1.12%) fell back or barely rose over the same period, forming a stark contrast.
This divergence also shows up in securities firm reports. In April, despite a continuing stock rally amid war risks, there were 192 target-price cut reports, far exceeding February (116) and March (68). The share of target-price cuts out of all reports also climbed from 5.06% in February and 6.09% in March to 12.36% in April, showing a widening gap between the index and individual stocks.
In a market where certain sectors forcibly pull up the index, individual investors' perceived returns inevitably plunge. Investors who do not hold leading large-cap stocks such as semiconductors cannot enjoy any of the warmth of the index's rise, and even if they join the rally late, it is hard to secure expected returns due to the risk of chasing at the top. The index is setting a record high, but for most investors, critics say it is nothing more than "someone else's party."
Kim Yong-jin, a professor of business administration at Sogang University, said, "The KOSPI is rising, but as the tilt toward large caps appears, a 'mirage effect' 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 in just Samsung Electronics and SK hynix, so portfolio strategies have become practically meaningless."
Meanwhile, the gap between the KOSPI and KOSDAQ markets is also widening. The KOSDAQ is up 30% from early this year, about half the KOSPI's 53% rise.
Lee Hyo-seop, a senior research fellow at the Korea Capital Market Institute, said, "In the end, foreign and institutional investors need to come in large numbers to sustain a long-term upward momentum," and noted, "To make investors view it as an attractive market, authorities should strengthen sanctions on companies with poor disclosures or streamline delistings to improve market soundness."