KOSDAQ Left Behind... Gap in Profits, Concentration, and Interest Rates to Blame

Flagship Stocks Also Score Below 1 on 'Potential Index'
Dual Burden of Capital Concentration and Rate Hikes
Hopes for Structural Reforms Centered on Materials, Parts, and Equipment

While the KOSPI is experiencing an unprecedented rally, the KOSDAQ has remained trapped in a narrow range, intensifying polarization between the two markets. Experts point to the interplay of differing growth prospects, concentration in semiconductors, and interest rate hikes as key factors.

According to the Korea Exchange's 'Potential Measurement Index' by stock as of June 25, 41 stocks in the KOSPI—including Samsung Electronics (19.45), SK hynix (11.67), Industrial Bank of Korea (6.94), Hyundai Motor Company (5.85), and Kia Corporation (5.26)—recorded index values above 1. Leading firms in the global semiconductor value chain achieved overwhelming scores, while traditional blue-chip stocks provided robust support for the market's fundamentals. This index quantifies a company's future growth potential based on a composite of growth, scale, and profitability, and can be found on the Data Marketplace Investment Analysis Information from the Korea Exchange.

In contrast, the KOSDAQ's performance is dismal. Only one company, Yujin Robot (4.40), recorded an index value above 1. Osstem Implant (0.26), EcoPro BM (0.26), EcoPro (0.24), and Alteogen (0.19) all remained in the 0-point range. The low index values among leading KOSDAQ companies suggest that the market lacks investor confidence in terms of future growth potential and profitability.

This extreme polarization is attributed not only to KOSDAQ's weak fundamentals, but also to a dual burden of capital inflows into KOSPI large-cap stocks and the pressure of interest rate hikes. iM Securities identified extreme concentration of demand in KOSPI's semiconductor and large-cap stocks as a major reason for KOSDAQ's poor performance. Yuanta Securities highlighted the earnings gap among KOSDAQ companies, noting that the Bank of Korea's signal of possible rate hikes was the decisive blow. Since the KOSDAQ is heavily weighted toward high price-to-earnings ratio (high-PER) growth stocks, which place significant importance on future growth, the market is much more vulnerable to the burden of increased discount rates caused by rising interest rates. Historically, whenever the Bank of Korea has shifted from rate cuts or freezes to a rate hike cycle, the KOSDAQ has consistently underperformed the KOSPI.

Ultimately, there are growing calls for the stagnant KOSDAQ market to fundamentally restructure its industrial base by leveraging institutional support measures from financial authorities, rather than simply waiting for shifts in supply and demand. Analysts also suggest that policy changes scheduled to be implemented in the second half of the year could prove to be a watershed moment. Shin Young Securities noted that expectations for policy changes, such as introducing a promotion and relegation system, have been gradually building around the upcoming KOSDAQ 30th anniversary event scheduled for July 1-3. The firm also emphasized the potential for a generational shift among leading industries within the KOSDAQ, rather than merely focusing on institutional reforms. Only through structural innovation—by shedding nominal growth stocks with poor index performance—can the KOSDAQ achieve sustainable long-term gains.

Lee Sangyeon, an analyst at Shin Young Securities, said, "Just as the KOSDAQ was restructured around the bio sector in the 2010s, it is now worth noting the possibility that the market is being reorganized around semiconductor materials, components, and equipment. In this case, the future strength of the KOSDAQ is likely to be part of a structural re-rating process that reflects profit growth and changes in the industry's status driven by increased AI investment, rather than a short-term phenomenon caused by improved liquidity or policy expectations."

This content was produced with the assistance of AI translation services.