At 8 a.m. on the 9th, more than 30 Democratic Party of Korea lawmakers gathered in a small conference room at the National Assembly Members' Office Building. They came to attend a seminar by the party's economic policy study group, "Economy is the Democratic Party." The day's theme was "KOSDAQ is Korea's future." "Economy is the Democratic Party" is a representative Democratic Party economic study group that has discussed key Lee Jae-myung administration policies such as separate taxation on dividend income and stablecoins.
Rep. Kim Tae-nyeon of the Democratic Party, who serves as lead lawmaker, said, "The Lee Jae-myung administration is creating and implementing various policies to achieve KOSPI 5000, and we cannot leave KOSDAQ as is," adding, "As startups and venture technology companies are created in large numbers and grow, the economy will become stronger."
At the seminar, there was an argument that the United States' Nasdaq should be benchmarked to revitalize KOSDAQ. Specifically, the proposals included: ▲ separating KOSPI and the exchange ▲ increasing the share of institutional investors ▲ establishing a KOSDAQ activation fund. In particular, presenters stressed that, as of last year in the United States, companies ranked No. 1 to No. 7 among the top 30 by market cap were all listed on Nasdaq, and that Korea also needs a competitive system between KOSPI and KOSDAQ.
Kim Hak-kyun, head of the Korea Venture Capital Association, who took the podium as a presenter, said, "In the United States, 16 of the top 30 by market cap are listed on Nasdaq, accounting for a whopping 70% of market cap," adding, "By contrast, in Korea, only one of the top 30 is on KOSDAQ." He went on, "On Nasdaq, the investor ratio is 80% institutional and 20% retail, whereas on KOSDAQ it is the opposite at 20% institutional (including foreigners) and 80% retail."
Former Democratic Party lawmaker Hong Sung-guk said, "Looking at the National Pension Service's domestic stock investment share as of the end of 2023, KOSDAQ stands at about 6 trillion won, or just 4.2%," adding, "When evaluating the pension fund, people only look at the share of domestic stocks, but we need to see how much of the domestic stock portion is KOSDAQ." He added, "If the National Pension Service increases KOSDAQ in its asset allocation, other institutions will follow."
The problem is poorly run listed companies that cannot even pay loan interest with the money they earn. These so-called "zombie corporations" are cited as a reason KOSDAQ's competitiveness is being dragged down.
Rep. Oh Ki-hyeong, who chairs the Democratic Party's "KOSPI 5000 special committee," asked during the seminar, "There are about 600 loss-making companies on KOSDAQ. Is there a way to distinguish those with growth potential among them?" The point was that, to revitalize KOSDAQ, listing maintenance requirements should be strengthened and poorly run corporations should be delisted.
Kim said, "During the last presidential election, I proposed moving delisted KOSDAQ corporations down to KONEX. It would have a 'buffer effect' that reduces investor backlash." Former Rep. Hong said, "It is important for the current administration to push through the strengthening of listing maintenance requirements properly, and if delistings increase, investors will not invest recklessly."
The Democratic Party is considering measures to revitalize the KOSDAQ market, including the discussions held that day. A Democratic Party official said, "If the KOSDAQ market does not grow together, it is hard to say that the activation of the capital market has been fully achieved," adding, "Unlike KOSPI, KOSDAQ involves many sensitive areas such as the delisting of poorly run corporations, so it is still difficult to have concrete discussions at this stage."