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KOSDAQ Soars as World's 2nd-Best Index on Government Support

South Korea's KOSDAQ index was the world's second-best-performing stock index over the past month, with a 16.45% surge, trailing only the country's main KOSPI index. The rally is attributed to government measures aimed at boosting the venture-heavy secondary market, including expanding public investments and tightening delisting rules. Analysts note the rise is driven by ETF investments and anticipation of further policy focus on the KOSDAQ. A proposed bill in the National Assembly seeks to spin off KOSDAQ operations into an independent subsidiary to grow it into a market akin to the US Nasdaq.

Key Points: KOSDAQ Ranks as 2nd-Best Global Index After KOSPI

  • KOSDAQ rose 16.45% in a month
  • Outperformed Nasdaq and S&P 500
  • Government announced supportive measures
  • Bill proposed to spin off KOSDAQ functions
  • Aim to grow market like US Nasdaq
2 min read

KOSDAQ 2nd-best-performing global index over support measures

South Korea's KOSDAQ surged 16.45%, becoming the world's second-best-performing stock index, driven by government measures to boost the secondary market.

"The key point...is to establish a structural base for institutional investors to participate in the KOSDAQ market. - Jeong Eui-hyun"

Seoul, Feb 16

South Korea's smaller KOSDAQ was the second-best-performing stock index in the world over the past month, only after the country's benchmark KOSPI, amid government measures to boost the secondary market, data showed on Monday.

The KOSDAQ rose 16.45 per cent from 949.81 points on January 13 to 1,106.08 points on Friday, according to the data from Yonhap Infomax, the financial arm of Yonhap News Agency.

Trailing behind the KOSDAQ were SET and ISE-100 -- benchmark indexes of Thailand and Turkey -- which rose by 16.05 per cent and 15.71 per cent, respectively, during the one-month period.

The KOSDAQ sharply outperformed U.S. markets. The tech-heavy Nasdaq fell 4.79 per cent and the S&P 500 inched down 2.07 per cent over the one-month period, according to the data.

The best-performing stock index in the world was South Korea's benchmark KOSPI (Korea Composite Stock Price Index), which jumped 19.07 per cent during the cited period.

"The KOSDAQ index is continuing to rise, mostly driven by investments in exchange-traded funds (ETF) holding companies in the secondary market, amid anticipation that the government's policy focus will move to the KOSDAQ," Lee Sung-hoon, an analyst from Kiwoom Securities, said.

The government has announced a slew of measures to boost the venture-heavy KOSDAQ under its initiative to transition into productive finance.

It has vowed to expand public investments in the secondary market while tightening delisting rules to remove troubled companies, which have long been considered a drag on the junior market's growth.

An even bolder move is under way at the National Assembly.

Earlier this month, a ruling Democratic Party lawmaker proposed a bill to spin off all functions related to the KOSDAQ market at the Korea Exchange, the country's main bourse operator, into an independent subsidiary.

The bill aims to grow the secondary market into the likes of Nasdaq in the United States.

"The key point of the government's measures is to establish a structural base for institutional investors to participate in the KOSDAQ market," Jeong Eui-hyun, an analyst from Mirae Asset Securities, said.

"We think the measures could both normalise liquidity and valuation of the secondary market," he added.

- IANS

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Reader Comments

P
Priya S
Wow, a 16.45% jump in a month is impressive! Shows what targeted government support can do. While our Sensex and Nifty do well, I wonder if our mid and small-cap indices get enough policy love. Good for Korean investors!
R
Rohit P
The aim to grow KOSDAQ into something like Nasdaq is ambitious. India has been trying to deepen its capital markets for years. SEBI has done good work, but maybe we need a more aggressive, focused drive for our innovation-driven companies, similar to this Korean plan.
S
Sarah B
Tightening delisting rules is a crucial step. One of the biggest risks for small investors in junior markets is getting stuck with non-performing companies. Hope Indian regulators are taking notes. Protecting investors should be priority number one.
V
Vikram M
While the performance is stellar, let's not forget this is likely driven by heavy ETF inflows and anticipation. The real test will be if this growth is sustainable after the initial policy euphoria wears off. We've seen similar bubbles in our markets too.
K
Karthik V
It's fascinating to see how different countries are nurturing their capital markets. South Korea focusing on productive finance and secondary markets is a smart long-term strategy for economic resilience. India's growth story also needs strong, vibrant markets beyond just the top 100 companies. Jai Hind!

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