The KOSDAQ index has remained in the 600th range, reverting to levels seen after the the 3rd state of emergency. Since the declaration of the state of emergency, the KOSPI has risen by 109.56%, while the KOSDAQ has actually fallen by 3.36%. The returns on KOSDAQ ETFs are also in negative territory.
On the 10th, the KOSDAQ closed at 667.61, up 28.64 points (4.48%) from the previous day. The index rose as bargain hunting concentrated on AI (artificial intelligence)-related stocks that had plunged sharply following the U.S. midterm elections.
Despite the rebound on this day, the KOSDAQ index has still failed to break out of the 600th range. It is even lower than the KOSDAQ index of 677.15 recorded on December 4, 2024, the day after the state of emergency was declared. It is only 40.6 points away from the post-state-of-emergency low of 627.01.
Since the state of emergency, the KOSDAQ rose to the 1,200 level in April last year on expectations for government-led policies to improve the KOSDAQ market, but subsequently declined amid issues such as supply and demand concentration due to single-stock leverage, volatility concerns, worries over U.S. interest rate hikes, debates over AI profitability, and concerns about strengthened AI regulations by the US Democratic Party.
In particular, top stocks by market capitalization on the KOSDAQ consist of biotech stocks, secondary battery stocks, and semiconductor materials, components, and equipment (soobu-gang) stocks, which are disadvantaged during periods of rising interest rates, leading to greater volatility.
Biotech stocks were significantly shaken by individual corporate issues, including the Samchundang Pharm incident. Secondary battery stocks, which had been declining for a long time due to an EV "chasm" (temporary demand stagnation), revived on expectations for ESS (energy storage systems) but slid again amid concerns over delays in AI data center construction. Semiconductor materials, components, and equipment stocks also showed volatility depending on AI-related issues.
The KOSPI once rose on expectations for shareholder returns, but the KOSDAQ, which is dominated by growth companies, did not benefit from this effect. This is because companies in the growth stage lack surplus cash or must reinvest any available funds into research and development.
As a result, passive ETFs (exchange-traded funds) tracking the KOSDAQ 150 index, as well as active ETFs managed with relatively greater freedom by fund managers, are recording negative returns.
According to KOSCOM ETF Check on this day, the one-month return (based on reinvestment of distributions) for the 'KODEX KOSDAQ150' ETF, which has the largest net asset value among KOSDAQ passive ETFs, is -28.72%, and its year-to-date return is -29.8%. The one-month return for the 'KoAct KOSDAQ Active' ETF, which has the largest net asset value among KOSDAQ active ETFs, is -32.97%, and its six-month return is -43.84%.
Experts in the financial investment industry view the environment surrounding the KOSDAQ as challenging but believe that the KOSDAQ index itself is forming a bottom zone. "Given that it is forming a bottom zone, we judge that the relative attractiveness of the KOSDAQ will be higher," said Na Seung-du, an analyst at SK Securities.
Additionally, there are forecasts that interest in small- and mid-cap stocks may increase as volatility grows for Samsung Electronics and SK hynix, the leading semiconductor stocks, due to debates over AI profitability.
"There is a possibility that related stocks will have a pause until the AI-related situation settles down," said Kang Hyun-gi, an analyst at DB Securities. "Interest may emerge in small- and mid-cap stocks, led by the KOSDAQ." He added, "The fact that the KOSDAQ has proactively formed a bottom is also a factor that creates expectations for the future," explaining, "In the first half of next year, a stock market where various stocks move within the KOSDAQ may emerge."
It is also positive that government policies to activate the KOSDAQ market, such as the KOSDAQ segment system (promotion and demotion) which separately selects and manages high-quality companies, and strengthened criteria for delisting from the KOSDAQ, are still ongoing. "Once the KOSDAQ segment system becomes established, large high-quality companies may remain in the KOSDAQ market without necessarily relocating their listings to the KOSPI, thereby increasing the overall scale of the KOSDAQ market," said Um Su-jin, an analyst at Hanwha Investment & Securities. "After the introduction of the system, the total trading volume of the entire market could also continue to grow."
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