Yi Whan-woo is a Korea Times journalist primarily covering finance. He writes in-depth articles on macroeconomy and financial markets and previously covered sports, politics, diplomacy and inter-Korean affairs, among others. Feel free to contact him at yistory@koreatimes.co.kr.
Major Kosdaq firms’ exodus to KOSPI adds to market divide concerns
An electronic board at Hana Bank headquarters in central Seoul shows the benchmark KOSPI closing at a record high of 4,221.87 points, Monday, up 2.78 percent from the previous session, while the secondary bourse Kosdaq rose 1.57 percent to finish at 914.55 points. Yonhap
By Yi Whan-woo
Major listed companies are departing from the junior bourse Kosdaq to the benchmark KOSPI, adding to concerns over a widening gap between the two exchanges in market value, according to industry officials, Monday.
Alteogen and Ecopro BM, the largest and second-largest Kosdaq companies by market capitalization, are planning to move to KOSPI, with Alteogen formalizing its listing in late September and Ecopro BM reviewing the details of a potential transfer.
Together, the two companies represent nearly 9 percent of Kosdaq’s total market capitalization, highlighting the scale of potential losses for the secondary bourse.
This trend follows a long history of major Kosdaq companies migrating to KOSPI.
Since its launch in July 1996 as a tech-heavy market with a baseline of 100 points, a total of 54 Kosdaq firms have shifted to the main bourse. These companies included Naver, Celltrion, Kakao, POSCO Future M, POSCO DX, and L&F.
Over the past three decades, Kosdaq has struggled to gain traction, hovering in the 900-point range, while KOSPI, which began at a baseline of 100 points in January 1980, has exceeded 4,000 points as of Oct. 27.
A study by the Korea Capital Market Institute found that if 48 of the companies that moved to KOSPI between 1998 and 2018 had remained on Kosdaq, the exchange’s index would be approximately 23 percent higher today.
“Under the current circumstances, Kosdaq will continue to remain as ‘KOSPI’s second league’ if painstaking structural reforms are not taken,” Jung Eui-jung, head of the Korean Stockholders’ Alliance, said.
Jung pointed out that Kosdaq is dominated by individual investors, who account for 65 percent of trading, compared with 36.6 percent on KOSPI.
The annual turnover rate exceeds 430 percent, meaning a single Kosdaq stock changes hands more than four times a year, compared with KOSPI’s roughly 180 percent.
Other securities experts noted the need to increase institutional investor participation and to foster a long-term investment culture.
Kosdaq Association Chairman Lee Dong-hoon called for legally codifying strategic asset allocation for the National Pension Service, gradually increasing its Kosdaq exposure to around 3 percent of its total managed assets, worth about 1,200 trillion won ($840.51 billion).
Discussions are also underway to establish a “Kosdaq revitalization fund,” led by the Korea Venture Capital Association, aimed at improving institutional participation, enhancing liquidity, and reducing “information asymmetry” that limits investor access.
Kim Jun-seok, senior researcher at the Korea Capital Market Institute, said analysts' coverage of Kosdaq stocks remains limited and “wider coverage would be needed for investors to get a clearer picture.”
According to financial data provider FnGuide, more than 17,000 securities reports were published this year as of late October, with 77.4 percent focusing on KOSPI stocks.
A total of 36 companies received more than 100 reports each — all from KOSPI, and none from Kosdaq.
“Only a few reports on small- and mid-cap Kosdaq stocks provide high-quality, actionable information,” Kim said. “This imbalance reduces accessibility for institutional and foreign investors.”
“With Kosdaq approaching its 30th anniversary, retaining top-performing companies and bridging the widening value gap with KOSPI are critical challenges for policymakers and market participants alike,” he added.