Park Han-sol reports on Korea's financial regulators, along with fintech and insurance. She previously wrote about the art world, from biennales and exhibitions to fairs and auctions, with a focus on Seoul and the figures shaping the scene. Before joining The Korea Times, she spent a year at ABC News' Seoul bureau, contributing to coverage of major Asia-Pacific events.
Two-tier Kosdaq market plan draws mixed reactions
A stock ticker at Hana Bank headquarters in central Seoul shows the benchmark KOSPI closing at 5,781.20, up 17.98 points, or 0.31 percent, Friday. The secondary bourse Kosdaq rose 18.04 points, or 1.58 percent, to finish at 1,161.52. Yonhap
By Park Han-sol
Some industry watchers say it will improve market visibility, others raise polarization concerns
The Financial Services Commission’s (FSC) plan to split secondary bourse Kosdaq into two tiers is drawing mixed reactions, with some expecting the structure to enhance market efficiency while others warn it could deepen polarization, industry officials said Friday.
Under the proposal presented by the top financial regulator, a tentatively named “premium” segment would include 80 to 170 large-cap firms out of about 1,800 Kosdaq-listed companies, selected based on a range of criteria including market capitalization, profitability and corporate governance. The “standard” segment would comprise typical growth-stage firms.
The initiative aims to stabilize and revitalize Kosdaq by fostering top-performing “star” companies and establishing a new benchmark index centered on leading firms in the upper tier. The index would be linked to exchange-traded funds (ETFs), a move intended to broaden investor participation and enhance market liquidity.
The system, loosely modeled on Nasdaq’s multitier structure, would allow companies to move between the two segments in a bid to sharpen competition and improve overall market quality.
FSC Chairman Lee Eog-weon unveiled the proposal as part of broader measures to structurally reform domestic capital markets at a meeting chaired by President Lee Jae Myung last Wednesday.
Reaction in the market is split.
Skeptics warn that the structure could funnel capital disproportionately into the top tier, deepening polarization in a market where most companies would remain in the lower segment.
They also note that a shift between tiers does not necessarily reflect an immediate improvement in a company’s fundamentals or performance. For smaller firms, operational gains often take time to translate into earnings.
Moreover, if a company is downgraded for failing to meet certain criteria, it could trigger a sharp sell-off driven more by investor sentiment than by underlying fundamentals. Such reclassification, they noted, may act as a negative signal to the market, potentially worsening the firm’s financing conditions.
A case in point is the “Kosdaq Global” segment, launched in November 2022 as a premium grouping of 52 blue-chip companies, which has struggled to gain visibility and attract meaningful capital inflows.
Supporters, however, argue that the framework could make stronger companies more visible, improving market accessibility and appeal for global investors.
“Established, profit-generating firms need to stand out for Kosdaq to attract international capital,” IBK Securities senior analyst Lee Geon-jae said.
Heungkuk Securities analyst Park Jong-ryul added, “Steering the market toward high-quality, innovative companies would enhance its overall appeal. Benchmark indices and ETFs centered on top-tier firms could help draw greater participation from institutional and foreign investors.”
The Korea Exchange (KRX) plans to roll out the new system in the second half of this year.
“We will revise relevant regulations to support the Kosdaq market’s sustained growth in line with the objectives of the new framework,” a KRX official said.