KOSDAQ closed at 753.34 on the 21st, falling below the level recorded when President Lee Jae-myung took office, after rising in the months following his inauguration. The decline occurred as capital concentrated in large semiconductor stocks through leverage exchange-traded funds (ETFs), draining investment from KOSDAQ growth stocks. Delisting fears are intensifying as the Korea Exchange raised the market capitalization threshold for listing maintenance from 40 billion won last year to 200 billion won this month, with a further increase to 300 billion won scheduled for January next year.
On the 21st, KOSDAQ closed at 753.34, up 3.70 points (0.49%) from the previous trading day. Individual investors net purchased 145 billion won worth of shares, while foreign and institutional investors net sold 134 billion won and 14 billion won respectively. The main KOSPI market surged 231.68 points (3.56%) to close at 6,747.95, with Samsung Electronics rising 6.15% to 259,000 won and SK Hynix climbing 4.08% to 1,836,000 won.
KOSDAQ Falls 480 Points from April Peak
KOSDAQ appeared to rebound after President Lee Jae-myung's inauguration, supported by the government and ruling party's vision for a "three-thousand KOSDAQ." On January 26 this year, the index broke through the 1,000 level for the first time since 2022. On April 27, it reached a yearly high of 1,226.18. However, three months later on the 21st, KOSDAQ retreated to the 750 level, erasing all gains. The 480-point decline from the peak reduced market capitalization by 258 trillion won (38.04%). This year, the index triggered buy-side and sell-side circuit breakers 13 and 10 times respectively, demonstrating extreme volatility.
Leverage ETF Launch Accelerates Capital Outflow
The market assessed that KOSDAQ's decline accelerated after the launch of Samsung Electronics and SK Hynix leverage ETFs on May 27. Massive capital flows concentrated in semiconductor stocks, causing large-scale withdrawal of investment funds that had been directed toward KOSDAQ growth stocks. In the recent month, individual net investment funds flowing into 14 single-stock leverage ETFs reached 5.85 trillion won. Due to this capital concentration, KODEX KOSDAQ150, composed of 150 core stocks, plunged 35.01% since the single-stock leverage ETF launch.
Nine Companies Added to Watchlist This Month
Concerns are growing over side effects of the government's KOSDAQ revitalization policies. The Korea Exchange raised the listing maintenance standard from a market capitalization of 40 billion won last year to 150 billion won in January this year, then raised it again to 200 billion won on the 1st of this month. The threshold is scheduled to increase to 300 billion won starting January next year. As a result, only six KOSDAQ companies were designated as watchlist stocks due to insufficient market capitalization in the first half of this year (January to June), but nine additional companies were designated this month alone (1st to 21st). As of the 21st, companies with market capitalization below 300 billion won accounted for 24% of all KOSDAQ-listed firms.
Regulatory Procedure Limits Appeal Opportunities
The problem is that limited appeal opportunities may place even companies with growth potential at risk of delisting. In the KOSDAQ market, companies that fail to meet the 200 billion won market cap standard for 30 consecutive trading days are designated as watchlist stocks. If they subsequently fail to exceed the standard for 45 consecutive trading days within 90 trading days, delisting procedures proceed immediately without separate review. Concerns emerge that as delisting risks increase, investors have greater incentive to withdraw funds, creating a vicious cycle that drags down stock prices regardless of a company's fundamentals.
Yang Jun-seok, professor of economics at Catholic University, stated, "Given that zombie companies are currently positioned in KOSDAQ and market trust has declined, strengthening delisting standards is a necessary procedure." However, he advised, "Since there may be companies experiencing temporary difficulties or with sufficient growth potential, sufficient appeal opportunities must be guaranteed before delisting."
FAQ
What level did KOSDAQ close at on the 21st?
KOSDAQ closed at 753.34 on the 21st, up 3.70 points (0.49%) from the previous trading day. This level is below the index recorded when President Lee Jae-myung took office.
How many KOSDAQ companies were designated as watchlist stocks this month?
Nine companies were designated as watchlist stocks this month (from the 1st to the 21st) due to insufficient market capitalization. In comparison, only six companies received this designation during the entire first half of the year (January to June).
What is the current market capitalization threshold for KOSDAQ listing maintenance?
The Korea Exchange raised the listing maintenance standard to 200 billion won on the 1st of this month. This threshold is scheduled to increase to 300 billion won starting January next year. Last year, the standard was 40 billion won, and it was raised to 150 billion won in January this year.
