Cheong Wa Dae is preparing a sweeping institutional overhaul, saying it will carry the momentum of "KOSPI 5000" over to KOSDAQ. Measures floated include delisting so-called "zombie corporations" that cannot even pay interest despite earning money, as well as tax support and an exchange revamp.
On the 29th, President Lee Jae-myung shared a report on X (formerly Twitter) that Koo Yun-cheol, deputy prime minister for the economy and Minister of the Ministry of Economy and Finance, previewed a tax overhaul aimed at "strengthening KOSDAQ competitiveness," and wrote, "The securities exchange is a kind of department store," adding, "If there are many rotten products and fake products with no product value, who would go there?" He continued, "It is urgent to firmly sort out the products first and promptly introduce good new products to restore customer trust," adding, "Of course, pickpockets must also be thoroughly cracked down on."
The "rotten products" mentioned by the president refers to so-called zombie corporations. KOSDAQ has a lower bar for listing, but it has also been criticized for making it hard to oust insolvent corporations. This structure has been cited as a factor behind the "KOSDAQ discount," undermining investor confidence.
At the level of the Cheong Wa Dae policy office, the focus is also on shoring up KOSDAQ. Policy chief Kim Yong-beom said at a press briefing the day before, "KOSDAQ is quite disappointing compared with KOSPI," adding, "We are reviewing upgrade measures to return KOSDAQ to when it was true to itself." He said, "The president instructed us to reform the exchange, the core of the capital market, beyond institutional matters such as the Commercial Act and overall upgrade plans," adding that reform measures are being reviewed with the Financial Services Commission and the Korea Exchange (KRX).
◇"Artificial boosts are risky; first, remove insolvent firms"
Within the ruling Democratic Party of Korea, bodies such as the "KOSPI 5000 special committee" are grappling with KOSDAQ improvement plans. Still, some say the low fundamentals and side effects must be considered. The consensus is that improving the market's constitution comes first. The intent is to spur investment by fixing structures such as the tax regime, but there are concerns that artificial support could produce side effects. With local elections ahead, the political sphere is also weighing the political burden from delistings.
A ruling-party official said in a call, "Having achieved 5,000 on the KOSPI, an approach of 'this time, let's lift KOSDAQ' could be risky." The official said, "It is right to see today's KOSDAQ as a bubble. A market is not something you can lift on purpose. The priority is to sort out the corporations that cannot even pay interest." On expelling insolvent corporations, the official said, "We also have to consider those whose own shares will immediately turn into scraps of paper," adding, "From the party's standpoint, we need to consider the timing issues such as local elections. It is not something we can easily call a 'boom.'"
The Korea Governance Forum also issued a commentary on the 27th, saying, "On the KOSPI, many stocks were undervalued relative to fundamentals, so resolving the valuation discount through governance improvements was the right answer," adding, "By contrast, artificial stimulus for KOSDAQ is not desirable." It added, "KOSDAQ's fundamentals have fallen considerably and valuations are already on the high side," and said, "The way to revive KOSDAQ is to boldly and quickly expel insolvent corporations, even if it becomes a political burden."