The KOSPI index topped 9,000 for the first time ever, but KOSDAQ investors are not smiling. As foreign and institutional funds flow only into large-cap semiconductor stocks within the KOSPI, the KOSDAQ market is effectively left out and retreating. Even as a celebration unfolds with the market setting a record high, warmth is concentrated in a handful of top names, and the relative sense of deprivation felt by KOSDAQ investors is, paradoxically, deepening.
On the 19th, according to the Korea Exchange (KRX), the previous day's KOSDAQ index closed at 1,000.93, down 31.03 points (3.01%) from the prior session. It briefly fell below 1,000 during the session. This contrasts with the KOSPI settling above 9,000 for the first time ever on the same day.
Flows also diverged. Individuals net bought nearly 400 billion won in a defensive move, but foreigners and institutions net sold 132 billion won and 265 billion won, respectively. The number of decliners reached 1,436, while advancers were only 245.
Large-cap stocks by market capitalization also lost steam. Among the top by market value, EcoPro BM (-4.28%), EcoPro (-4.32%), Alteogen (-0.94%), and HLB (-1.38%)—key names in secondary batteries and bio—mostly weakened. In the KOSPI as well, advancers were limited to 109, while decliners numbered 791. The index rose, but that does not mean the entire market climbed together.
In fact, the gap between the KOSPI and KOSDAQ has been widening this year. The KOSPI has risen 115% from the start of the year, but the KOSDAQ's gain is limited to 8%. Early in the year, both the KOSPI and KOSDAQ climbed on hopes for policies to revitalize Korea's stock market, but the deepening tilt toward semiconductors has changed the mood.
Even individual investors are turning away from the KOSDAQ. From the 1st of this month through the previous day, individual investors net bought more than 16 trillion won on the main board, while they dumped 1.087 trillion won worth on the KOSDAQ market.
The KOSDAQ's slump stems from a sharp shift to an earnings-driven market. The "keeping pace market," in which warmth spread broadly to growth stocks on the back of certain themes such as secondary batteries or bio as in the past, has disappeared. As funds concentrate in semiconductor stocks where earnings improvement tied to expanded artificial intelligence (AI) investment is being confirmed, KOSDAQ growth stocks are relatively being left out, analysts say.
Lee Jae-won, an analyst at Yuanta Securities Korea, said, "Foreign funds are flowing into large caps, and individual investors are also recently moving to KOSPI large caps," adding, "Given the Bank of Korea (BOK)'s potential rate hike and an earnings cycle centered on large caps, for now KOSDAQ's relative appeal is lower than KOSPI."
Still, there are expectations that policy momentum could work in favor of the KOSDAQ market in the second half. Representative measures include the government's proposed 150 trillion won Public Growth Fund and the plan to introduce KOSDAQ market segment separation (promotion and relegation). If high-quality companies are classified into a separate market, the base for institutional fund inflows could expand, according to projections.
Strengthening the exit of insolvent firms is also seen as a positive factor for improving the market's structure. The Financial Services Commission and the Korea Exchange (KRX) plan to toughen delisting criteria for so-called "penny stocks" starting next month.
Lee Sang-yeon, an analyst at Shinyoung Securities, said, "The time is approaching for policy momentum on KOSDAQ overall to come back into focus," adding, "Around the KOSDAQ 30th anniversary event, the chances are rising that detailed implementation plans related to segment separation will be unveiled, and policy expectations will gradually build."