Once a thriving commercial district, a once-bustling area is now filled with vacant storefronts. Initially, businesses flourished, drawing crowds eager to enter shops that often had long lines. However, as time passed, the atmosphere shifted. Empty shops began to dominate the streets, and many restaurants now operate without a single customer all day. The owner of the last successful fish market ultimately decided, "If I stay in this area any longer, I will go bankrupt too." He planned to relocate to a neighboring district with significantly more foot traffic. In response, the local merchants' association urgently pleaded, "What will we do if you leave?"
This scenario mirrors the current state of the KOSDAQ market. The fish market owner represents Alteogen, a leading KOSDAQ company with a market capitalization nearing 20 trillion won. As Alteogen announced its official transition to KOSPI, a sense of urgency swept through the KOSDAQ market. Both the KOSDAQ Association and the Venture Business Association publicly urged, "Please stay with KOSDAQ." This issue extends beyond a mere market listing; it reflects a deep-seated fear that the last prominent company may soon depart.
This is not the first time such a situation has occurred. Companies like NHN, Kakao, and Celltrion have previously moved to KOSPI. More recently, major firms such as POSCO DX and LG Energy Solution have followed suit. Initially, these transitions were celebrated as "success stories" for KOSDAQ companies. However, as this trend has continued, a sense of cynicism has taken root in the market. Investors now commonly believe that "successful companies ultimately leave for KOSPI." This perception has led to KOSDAQ being viewed as a "second-tier league" or "KOSPI's minor league."
From a corporate perspective, moving to KOSPI is a rational choice. KOSPI offers significantly greater access to institutional investors and global passive funds, along with the benefits of inclusion in the KOSPI 200 index. The trust and liquidity from foreign investors are also difficult to compare with KOSDAQ. Particularly in an era where global funds are increasingly focused on AI, semiconductors, and large-cap growth stocks, being part of KOSPI can heavily influence a company's valuation. Consequently, KOSDAQ is becoming a temporary stop rather than a long-term destination for growth companies.
The result of this trend raises concerns. What remains in KOSDAQ after the departure of its leading companies? While the number of listed companies exceeds 1,800, the quality of the market is deteriorating. There is an oversupply of penny stocks priced below 1,000 won, alongside many illiquid stocks, long-term loss-making companies, and thematic firms. Critics argue that the market has transformed from an innovative hub into a stage for short-term speculation and thematic trading. The exit of leading stocks weakens ETF investments and institutional demand, shaking market confidence and trading volumes. As a result, volatility remains high. While KOSPI has more than tripled in value over the past year, KOSDAQ has struggled to break free from the 1,100 level.
Despite the sluggishness of KOSDAQ, there was a golden era during the dot-com bubble of 1999-2000. At that time, KOSDAQ was home to prominent companies such as Daum Communications, Auction, Hancom, and Saerom Technology, which were seen as representatives of innovation in South Korea. Their stock prices soared above those of large corporations, making them top choices for investors. The peak of the KOSDAQ boom occurred on March 10, 2000, when the index reached 2,925.20.
To revive KOSDAQ's golden age, the government has proposed various measures, including the delisting of penny stocks and the introduction of a league system. There is consensus on the need to address underperforming companies to restore market confidence. It is also true that an excessive number of zombie companies undermines overall market trust.
However, the question remains whether these measures alone can restore KOSDAQ's competitiveness. The current crisis is not solely due to the presence of underperforming companies. The more fundamental issue lies in breaking the cycle where "successful companies ultimately leave for KOSPI." While KOSDAQ nurtures growth companies, the market's benefits are reaped by KOSPI, making KOSDAQ unsustainable. The departure of leading stocks weakens ETF investments and institutional demand, leading to declines in overall trading volumes and market trust. Ultimately, only highly volatile small and mid-cap thematic stocks remain.
Attention must also be paid to changes in the global liquidity environment. Currently, global funds are concentrated on a few large growth stocks, such as those in AI and semiconductors. Foreign investments are flocking to large-cap KOSPI stocks, leaving many KOSDAQ stocks overlooked. If global liquidity begins to waver, the first to feel the impact are typically the volatile growth stock markets.
While American companies like NVIDIA and Tesla grow, they remain on NASDAQ, enhancing the market's competitiveness. In contrast, Korea's leading growth companies are moving to KOSPI, diluting KOSDAQ's identity and competitiveness. The market that nurtures growth companies is unable to continuously enjoy the fruits of its labor.
Reforming KOSDAQ is an urgent task that can no longer be postponed. However, simply addressing a few penny stocks is insufficient. Without creating an ecosystem where quality companies and long-term investment funds can thrive, KOSDAQ is likely to remain a mere "transit point" before heading to KOSPI, rather than a market for innovative companies. If this continues, the Korean stock market will perpetuate a distorted polarization between the "celebration of 8,000 points" and the "stagnation of 1,000 points."
As the Lee Jae-myung administration approaches its one-year mark, KOSPI has surpassed 5,000 points and is now eyeing 8,000. However, KOSDAQ remains at 1,000. Therefore, the current government's goal of revitalizing the Korean capital market has only achieved a 50% success rate. It is now time for the government to strengthen its commitment and act swiftly to achieve the targets of 2,000 and 3,000 points for KOSDAQ.
* This article has been translated by AI.
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