"Pension Fund Expansion and Early Removal of Insolvent Firms... Suggestions for Strengthening KOSDAQ Competitiveness"

Need to Improve the Individual-Centric Supply and Demand Structure
Listing Delisting Review Period Should Be Shortened to Within Six Months
The Exchange to Introduce NASDAQ-Style Market Segmentation

In order to strengthen the competitiveness of the KOSDAQ market, experts have suggested the need to expand the share of investment by pension funds, shorten the delisting process for insolvent and marginal companies, and diversify market supply channels.

Seungtaek Hwang, Head of Research Center at Hana Securities, is giving a presentation titled "Diagnosis of the KOSDAQ Market: The Market's Perspective on KOSDAQ" at the "Strengthening Competitiveness of the KOSDAQ Market" session on the second day of "Korea Premium Week 2026" held at The Grand Lotte Seoul in Jung-gu, Seoul on September 29, 2026. Photo by Hyunmin Kim

Hwang Seungtaek, Head of the Research Center at Hana Securities, stated at Korea’s largest capital market IR event, "Korea Premium Week 2026," held at The Grand Lotte Seoul in Jung-gu, Seoul on September 29, 2026, "While the number of companies listed on KOSDAQ continues to increase, average profitability per company is deteriorating." He pointed out, "The top 10 stocks by market capitalization account for approximately 18.5% to 25% of the total market capitalization, indicating polarization."

Hwang further noted, "Individual investors make up about 75% to 80% of the average daily trading volume, while the share of institutional and foreign investors remains absolutely low," and added, "Due to this fragile supply environment, investor outflow is accelerating as sharp price fluctuations triggered by external factors are repeated."

As structural constraints, Hwang listed: ▲ insufficient accessibility to information for foreign investors ▲ decision-making focused on major shareholders and inadequate shareholder returns ▲ and inadequate mechanisms for eliminating insolvent and marginal companies.

He commented, "If pension funds were to increase their share of KOSDAQ investments by just 1%, it could lead to an inflow of approximately 12.5 trillion to 13 trillion won." He added, "Since a significant portion of trading volume is dominated by individual investors, capital inflow from pension funds could dramatically improve passive and mid- to large-cap KOSDAQ liquidity."

Hwang emphasized, "The listing and delisting review periods should be reduced from the current 1.5 to 2 years to within 6 months, and specialized review organizations and institutions should be introduced." He stressed, "A strict and swift early exit track must operate in order to foster sound innovative companies and fundamentally improve the KOSDAQ market."

Minkyung Wook, Head of the KOSDAQ Market Division at Korea Exchange, delivered the keynote speech on "The Direction for the KOSDAQ Market" during the "Measures to Strengthen the Competitiveness of the KOSDAQ Market" session on the second day of "Korea Premium Week 2026," held at The Grand Lotte Seoul in Jung-gu, Seoul, on the 29th of September, 2026. Photo by Hyunmin Kim

Minkyoung Woo, Head of the KOSDAQ Market Division at Korea Exchange, stated, "Now is the time to achieve not only quantitative growth but also repeated qualitative growth," and added, "As investor standards have risen toward global best practices, the KOSDAQ must transform into a market that enjoys a premium, not a discount."

Woo explained, "The Exchange is pursuing improvements to the KOSDAQ’s foundation both in terms of market structure and listed companies." He continued, "We are working to implement a promotion and relegation system for the KOSDAQ market, with the core goal of increasing investor demand." He also said, "On the side of listed companies, we are further strengthening flexible entry and rigorous exit criteria to improve market fundamentals. We will make every effort to swiftly eliminate companies that undermine market order and become targets of unfair trading, to restore overall market trust and best prevent harm to bona fide investors."

Jiwoo Choi, Managing Director of the KOSDAQ Market Division at Korea Exchange, is giving a presentation on "Measures to Enhance the Competitiveness of the KOSDAQ Market" during the "Korea Premium Week 2026" Day 2 session on "Strengthening the Competitiveness of the KOSDAQ Market" held at The Grand Lotte Seoul in Jung-gu, Seoul on September 29, 2026. Photo by Hyunmin Kim

Jiwoo Choi, Executive Director of the KOSDAQ Market Division at Korea Exchange, stated, "For the KOSDAQ to advance further, it is necessary to remove insolvent firms more quickly, make it easier for investors to discover representative companies with growth potential and competitiveness, and enhance both the quantity and quality of investment information about the market." Choi added, "Through this, we aim to build a foundation for more long-term investment capital to flow into the KOSDAQ market."

Choi noted, "In the past, NASDAQ was regarded as a secondary market, but it has come to lead global trends as the world's largest advanced technology market by establishing a segment system." He continued, "The ultimate aim is not simply to stratify companies, but to create a dynamic market structure that fits the growth stages and characteristics of each company."

Soohyun Kang, Head of the Capital Markets Division at the Korea Capital Market Institute, stated, "There needs to be a redefinition of the KOSDAQ market’s role," adding, "Until now, performance has been measured by how many innovative companies were listed; however, going forward, the structure should allow these companies to continue growing as larger firms after listing and attract long-term capital."

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