The KOSDAQ index closed at 748.22 on the 24th, down 5.32%, marking its lowest closing level since June 2 of the previous year at 740.29. The index, which surpassed 1200 in April at 1203.84 after re-entering the 1000 level in January for the first time in approximately four years, has returned to levels seen one year prior within a three-month span. The decline stemmed from distorted fund flows caused by single-stock leverage exchange-traded funds (ETFs) launched on May 27, combined with several market-cap-weighted pharmaceutical and biotech companies being designated as unfaithful disclosure entities after executives announced and then withdrew share sale plans. The securities industry is monitoring whether the National Growth Fund and KOSDAQ revitalization measures can serve as catalysts for market recovery, with the government preparing a tier system dividing approximately 1800 KOSDAQ listings into Premium and Standard categories, scheduled for announcement in September-October and implementation in the first half of next year.
KOSDAQ Trading Volume Drops 39.29% Following Single-Stock Leverage ETF Launch on May 27
According to Korea Exchange data reported on the 26th, KOSDAQ daily average trading volume measured 14.44 trillion won from January 1 through May 26, but plummeted to 8.77 trillion won from May 27 through July 24, a 39.29% decline. Single-stock leverage ETFs targeting Samsung Electronics and SK Hynix, launched on May 27, intensified fund concentration in these stocks. Individual investors net sold 1.07 trillion won worth of KOSDAQ stocks from May 27 onward, while demonstrating net buying of 55.78 trillion won in the KOSPI market during the same period. The high-risk single-stock leverage ETF products absorbed KOSDAQ funds.
Pharmaceutical and Biotech Companies Designated as Unfaithful Disclosure Entities
Several pharmaceutical and biotech companies listed on KOSDAQ with high market capitalizations were designated as unfaithful disclosure entities after CEOs announced share sale plans and subsequently withdrew them. These companies also faced issues including clinical trial difficulties for treatments. The consecutive negative developments occurred as global interest rate increases limited fund inflows to growth stocks including pharmaceuticals, biotech, and secondary batteries. The KOSPI index, in contrast, rose 148.01 points from 2698.97 on June 2 of the previous year to 2690.62 on the 24th of this month over the approximately one-year period, despite recent high volatility.
Government Plans KOSDAQ Tier System Implementation in First Half of Next Year
The government is advancing a tier system that will divide approximately 1800 KOSDAQ-listed stocks into Premium and Standard categories to improve index composition centered on Premium stocks. Specific details are projected to be announced in September-October with implementation in the first half of next year. A securities industry official stated that forming upward momentum centered on quality stocks is important, and that the National Growth Fund, which supplies capital to innovative companies, will also be a key variable.
FAQ
What caused the KOSDAQ index to fall to 748.22 on the 24th?
The KOSDAQ index declined 5.32% to close at 748.22 on the 24th due to distorted fund flows from single-stock leverage ETFs launched on May 27, which intensified concentration in Samsung Electronics and SK Hynix, combined with pharmaceutical and biotech companies being designated as unfaithful disclosure entities after executives announced and withdrew share sale plans.
How did KOSDAQ trading volume change after single-stock leverage ETFs launched on May 27?
KOSDAQ daily average trading volume dropped from 14.44 trillion won (January 1-May 26) to 8.77 trillion won (May 27-July 24), a 39.29% decline, as single-stock leverage ETF products absorbed KOSDAQ market funds.
When will the government implement the KOSDAQ tier system?
The government plans to announce specific details of the tier system, which will divide approximately 1800 KOSDAQ listings into Premium and Standard categories, in September-October, with implementation projected for the first half of next year.
