In the domestic stock market, funds are concentrating on large-cap semiconductor stocks centered on Samsung Electronics and SK hynix, deepening the neglect of the KOSDAQ market. Whenever the two stocks rose together, the KOSDAQ instead showed weakness, and outflows of funds stood out. In particular, analysts say the polarization of the market has become more pronounced as KOSDAQ trading volume and value plunged after the listing of single-stock leveraged ETFs.
According to the Korea Exchange (KRX) on the 30th, from the start of the year through the 26th, Samsung Electronics and SK hynix rose together on 57 out of a total of 118 trading days (48.31%). By contrast, the two stocks fell together on only 34 trading days (28.81%). The two stocks representing the domestic market mostly moved in the same direction, effectively leading the market trend.
The KOSDAQ showed a different pattern. During the 57 trading days when Samsung Electronics and SK hynix rose together, the KOSDAQ index fell an average of 1.2%. Conversely, during the 34 trading days when the two stocks fell together, it rose an average of 1.74%. This confirms a decoupling phenomenon in which the KOSDAQ is relatively weak the stronger the large-cap semiconductor stocks are.
A similar result appeared when looking at the share of trading days. Of the 56 trading days the KOSDAQ fell this year, 21 trading days (37.5%) overlapped with days when Samsung Electronics and SK hynix rose together. By contrast, of the 62 trading days the KOSDAQ rose, the days when the two stocks fell together numbered only 11 (17.7%). This means there were more days when the KOSDAQ underperformed relatively as Samsung Electronics and SK hynix were strong.
Kim Jun-young, an iM Securities researcher, said, "KOSDAQ's weakness has fundamentals, but market concentration is a major cause," adding, "Within the KOSPI, funds concentrated in S7 (Samsung Electronics, SK hynix, SK Square, Samsung Electronics(1P), Samsung Electro-Mechanics, Samsung Life Insurance, Samsung C&T), and the KOSPI market cap trend excluding S7 moved similarly to the KOSDAQ."
However, it was not the case that the entire KOSDAQ enjoyed a spillover benefit just because Samsung Electronics and SK hynix were weak. Even when the dominance of large-cap semiconductor stocks paused, funds did not shift in earnest to the KOSDAQ.
On the 26th, as Samsung Electronics and SK hynix plunged about 5% and 8%, respectively, semiconductor materials, parts, and equipment (SME) stocks such as TES (10.36%), PSK (10.32%), and Wonik IPS (5.88%) showed strength. However, it was not enough to lift the entire KOSDAQ index.
Market trends since the start of the year are also in stark contrast. While the KOSPI rose 99.59% from the start of the year, the KOSDAQ instead fell 8.01%. By contrast, the KOSDAQ150 information technology (IT) index, composed of semiconductor SME corporations such as Jusung Engineering, Wonik IPS, LEENO Industrial, and EO Technics, rose 62.83% over the same period. This shows that even within the KOSDAQ, funds have flowed only into semiconductor-related stocks.
After the listing of single-stock leveraged and inverse ETFs, the polarization between large semiconductor stocks and the KOSDAQ became even clearer. Since the listing of single-stock leveraged ETFs on Samsung Electronics and SK hynix on May 27, the KOSDAQ's average daily trading value has decreased about 26% from 14.4399 trillion won to 10.6556 trillion won. Average daily trading volume also fell about 44% from 1.28167 billion shares to 720.33 million shares.
By contrast, over the same period, trading in single-stock leveraged and inverse ETFs on Samsung Electronics and SK hynix increased rapidly. On the first day of listing, the 16 products' trading value exceeded 10 trillion won, and on the 24th, it reached a record 19.4 trillion won. On the 26th, trading value was 16.3998 trillion won, accounting for 35.2% of total ETF trading value (46.6393 trillion won).
In the securities industry, the view is that single-stock leveraged ETFs have become a channel that absorbs individual investors' funds that had been heading toward KOSDAQ growth stocks into Samsung Electronics and SK hynix. As leveraged ETFs allow investment in high-priced large-cap semiconductor stocks with relatively smaller amounts of capital than direct purchases, existing KOSDAQ investment demand has shifted to large-cap semiconductor stocks. In this process, the volatility of Samsung Electronics and SK hynix has spread to the entire KOSPI, while KOSDAQ supply-demand dynamics have weakened further.
Lee Jae-won, a Yuanta Securities Korea researcher, said, "Single-stock leveraged ETFs provide individual investors with leveraged exposure to high-priced large-cap semiconductor stocks," adding, "We are seeing the effect of reallocating even the momentum-driven flows that had been heading toward KOSDAQ growth stocks to large-cap semiconductor stocks."