By Yoon Ja-young
Staff Reporter
The number of companies listed on the Kosdaq market passes 1,000 today, marking a triple growth from 11 years ago.
``We approved the listings of MNtech, NeoTS, ISC Technology and Sangbo on Kosdaq, which will start trading from Oct. 1,'' said a spokesperson of the Korea Exchange, the country's stock market operator. The listing of the four businesses draws up the number of Kosdaq-listed firms to 1001.
The junior, tech-loaded market, which opened as an over-the-counter market in 1987, made a debut as a floor market on July 1, 1996 with 331 stocks on trading. The market recorded explosive growth with the IT bubble around the end of 1990s, with the number of firms listed there surpassing that of the main bourse Korea Exchange in 2001 November.
The market cap, which was a mere 8.6 trillion won in the beginning, grew 11 times to 105.2 trillion won, and the daily trading is averaging at 650 million shares with 2.1 trillion won, a drastic increase from 140,000 shares at 2.1 billion won in 1996. The explosive growth saw it cited as a huge success in the global tech stock market along with Nasdaq.
It is also seeking to transform into a global market, luring foreign businesses to list shares. Chinese digital audio manufacturer 3Nod Digital was the first foreigner to reach Kosdaq, but the stock market operator said a number of foreign companies, based in China and other countries, are contacting them for listing.
Kosdaq also had rainy days. The index once plunged to 324.71 points in 2004 August with the collapse of the IT bubble. Unfair transactions of a number of business owners brought negative impressions on investors.
Still, the junior market isn't as transparent as the main bourse. According to the Korea Exchange, the number of embezzlement and misappropriation recorded 34 this year, growing by 140 percent from the last year.
Experts also point out that Kosdaq is not expelling unqualified firms from the market as quickly as it should. The number of cases in which the biggest shareholder changed totaled 301 so far this year, up 35 percent from a year ago. The unqualified firms, which should have been out of the Kosdaq, are being used for backdoor listings and are confusing investors.
A number of entertainment firms, for example, acquired ailing firms listed on Kosdaq and changed the business purpose, a quick way of reaching the stock market. As their stock prices often fluctuated afterward, a lot of individual investors were left vulnerable. The number of backdoor listings on Kosdaq totaled 29 this year, 78 percent of the total listing since January.
Consequently, it is regarded by many as a market that quickly boils and rapidly cools down, where short-term investment seeking the jackpot is prevalent rather than long-term investment based on corporate value. Individual investors still take over 90 percent of the trade in the market, which means it is shunned by foreign and institutional investors.