Kosdaq down 1.5% this year while Kospi surges 77.6%; share prices of 7 in 10 listed firms have fallen since January; most active Kosdaq ETFs in the red
The gap in fortunes between the Kospi and Kosdaq has widened sharply this year, with Kosdaq investors missing out on the bull market while absorbing steeper losses during downturns.
Securities industry analysts attribute the divergence to the Kospi's rally being driven by a handful of large-cap names — chiefly Samsung Electronics and SK Hynix — while the Kosdaq's far larger and more fragmented roster of stocks has prevented broad-based gains from taking hold.
According to Korea Exchange data released Tuesday, the Kosdaq closed at 911.39 on Monday, down 1.52 percent from its final close of 925.47 last year.
That stands in stark contrast to the Kospi, which surged 77.60 percent over the same period, rising from 4,214.17 to 7,484.41. Even as the broader market earned a reputation as a "bull run" this year, Kosdaq investors were largely left on the sidelines.
When the market turned sharply lower, Kosdaq investors bore the brunt. On Monday, circuit breakers were triggered on both exchanges amid a severe selloff, but the Kosdaq tumbled 9.08 percent — outpacing the Kospi's 8.29 percent decline.
More than seven in 10 Kosdaq-listed companies have seen their share prices fall since the start of the year.
Korea Exchange data show that as of Monday, 1,286 of the 1,799 Kosdaq-listed stocks — 71.5 percent of the total — were trading below their year-opening levels, while only 460 had posted gains. The Kospi also had more decliners (630) than advancers (300), underscoring that this year's rally has been concentrated in a small number of large-cap stocks.
Analysts point to the Kosdaq's market structure — a large number of listings with a low proportion of large-cap stocks — as the root cause of its underperformance. As of Monday, the Kosdaq had 1,823 listed issues, roughly twice the Kospi's 948, yet its total market capitalization stood at around 510 trillion won (approximately $330 billion), just 8 percent of the Kospi's 6,132 trillion won.
The Kosdaq 150 index is also seen as an inadequate proxy for the broader market. Its combined market capitalization of 278 trillion won represents only 54.5 percent of the total Kosdaq market cap.
By comparison, the KOSPI 200's market capitalization of 5,710 trillion won accounts for 93.1 percent of the entire Kospi.
"The Kosdaq has too many stocks with too wide a spread in performance, making it a difficult market even for active ETF managers," a securities industry official said. "A number of active ETFs launched this year have failed to deliver the expected returns, and investor attention has ultimately gravitated toward a small group of large caps like Samsung Electronics and SK Hynix, along with related leveraged ETFs."
Korea Exchange data show that all of the major Kosdaq active ETFs — KoAct Kosdaq Active, TIME Kosdaq Active, PLUS Kosdaq 150 Active, MIDAS Kosdaq Active and TIGER Kosdaq Active — have posted negative returns since their respective launches.
"The Kosdaq is experiencing its most severe underperformance relative to the Kospi in history this year," said Yoon Jae-hong, a researcher at Mirae Asset Securities. "If initiatives such as the National Growth Fund, expanded pension fund inflows and Kosdaq revitalization policy measures gain momentum, we can expect meaningful improvement in the supply-demand environment."
He added that structural reforms are also under way, including tighter delisting requirements and a review of a promotion-and-relegation system between the two exchanges. "The door is open for a reappraisal of the Kosdaq, which has been overlooked for so long," he said.
hajun825@heraldcorp.com
