June 3 marks not only the local elections but also the one-year anniversary of the Lee Jae-myung administration. Following a tumultuous presidential election amid a state of emergency, South Korea has returned to a path of normalization over the past year. While evaluations of the various policies implemented by the Lee administration may vary, its most notable achievement in the economic sector is undoubtedly the revitalization of the KOSPI.
The KOSPI has broken free from the long-standing 'Korea Discount,' surpassing the 8,000 mark for the first time and now approaching 9,000. Just a few years ago, the sentiment surrounding the Korean stock market was one of cynicism, with many believing that even good companies were not receiving proper valuations. However, the atmosphere has changed. Measures to enhance shareholder rights through amendments to commercial law, strict penalties for stock manipulation, and policies aimed at increasing corporate value have bolstered market confidence and heightened expectations for foreign capital inflows. While the semiconductor boom may have contributed, few would deny that the Lee administration has been the primary driver of this stock market revitalization.
However, the administration's efforts to invigorate the stock market are not yet complete. The success remains only partial, as the KOSDAQ continues to struggle despite the impressive numbers of the KOSPI. The KOSDAQ, which should be a breeding ground for future growth companies, remains stagnant around the 1,000 mark. Although innovative firms in sectors such as venture capital, biotechnology, robotics, and semiconductor materials are present, the market sentiment is far from optimistic. While KOSPI investors celebrate, KOSDAQ investors often find themselves disheartened.
A healthy ecosystem must achieve balance. For the industrial ecosystem to thrive, large, medium, and small enterprises must each possess their own competitiveness. The same applies to the capital market. A market that is strong only in the KOSPI is not healthy. If the KOSPI reflects the current competitiveness of the South Korean economy, the KOSDAQ must embody the market's potential for future growth. The strength of the U.S. stock market can be attributed to the growth of innovative companies within the capital market and the shared benefits enjoyed by investors. In contrast, the KOSDAQ has long resembled a thematic market rather than a growth market, with expectations often overshadowing actual performance, leading to stock price fluctuations based on short-term issues. Criticism persists regarding the presence of underperforming companies that undermine market trust.
It is now time to accelerate efforts to revive the KOSDAQ. We must eliminate underperforming companies to ensure that innovative firms receive fair evaluations and attract long-term capital. However, simply removing companies is not enough. We also need to create an investment ecosystem where future industries such as AI, biotechnology, and robotics can flourish.
The government's structural improvement efforts, which include the removal of zombie companies and stricter delisting criteria for penny stocks starting in July, will be crucial to the success of these initiatives. In particular, the removal of zombie companies is a task that must be accomplished despite strong resistance and backlash. Although there are over 1,800 listed companies on the KOSDAQ, the competitiveness of individual stocks is severely lacking in both quantity and quality. A precise 'scalpel' must be applied to penny stocks, undervalued stocks, and theme-based stocks. Only then can we create a virtuous cycle that attracts capital to high-quality companies.
The KOSPI's achievement of 9,000 is undoubtedly a significant milestone. However, true advancement of the capital market will be realized when the success of the KOSPI is replicated in the KOSDAQ. If the past year has been a time for the normalization of the KOSPI, the next challenge is clear: it is now time to revive the KOSDAQ.
* This article has been translated by AI.
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