The market capitalization of the KOSDAQ market, which marks its 30th anniversary this year, has fallen below that of domestically listed exchange-traded funds (ETFs). As household funds have moved en masse into the stock market, the ETF market has grown sharply, while KOSDAQ's neglect has deepened.
According to the Korea Exchange (KRX) on the 28th, as of the 26th, the market capitalization of domestic ETFs totaled 502.4556 trillion won. After surpassing 500 trillion won for the first time ever at the end of May, domestic ETF market cap has held above the 500 trillion won level. By contrast, as of the 26th, the KOSDAQ market's cap stood at 478.7742 trillion won.
ETFs, which first began trading on the KOSPI market in 2002, have for the first time overtaken the KOSDAQ market, now in its 30th year. ETF market cap exceeded 100 trillion won for the first time in 2023 and passed 200 trillion won in June last year. With the KOSPI index surging this year, it expanded even faster. In January, ETF market cap first topped 300 trillion won, and in April and May it surpassed 400 trillion won and 500 trillion won, respectively.
The explosive growth of the ETF market owes much to the large inflow of household funds into stocks. In particular, beyond spare cash, the shift of retirement pensions into the market made ETFs play a key role.
Asset managers further expanded the market by competitively launching theme ETFs favored by individual investors. More than 100 ETFs each have a market cap exceeding 1 trillion won.
By contrast, the slump in the KOSDAQ market is deepening. As cash in circulation has recently concentrated in large semiconductor stocks, funds have flowed out of KOSDAQ, where bio and secondary battery sectors carry heavy weight.
Although expectations grew for inflows into the KOSDAQ market after the financial authorities said they would supply funds to advanced strategic industries via the Public Growth Fund, the effect proved fleeting. In February, the KOSDAQ index topped 1,190 points, seeming to kick off a rally. But as the brief bull phase ended, it recently fell to around 850 points.
With ETF market cap surpassing KOSDAQ, the gap between the two markets could widen further. The share of ETFs in the domestic stock market is still small compared with other developed countries. This is why expectations persist that the domestic ETF market will grow further. Meanwhile, the slump in the KOSDAQ market, now in its 30th year, has shown little sign of easing.