[Getty Images Bank]
[Getty Images Bank]

The number of Kosdaq-listed companies has surpassed 1,800, yet only about 40 percent received a brokerage research note in the past year. As listings consistently grow, the number of analysts and research teams covering those companies has shrunk, leaving a large share of stocks in an information void.

According to FnGuide data released Friday, 730 Kosdaq-listed companies received at least one brokerage research note in the 12 months ended June 10 — representing 40.1 percent of the 1,819 total Kosdaq listings. The remaining 1,089 companies went the entire period without a single note, meaning six in 10 Kosdaq-listed firms received no analyst coverage at all.

Brokerage research notes are among the primary tools investors use to assess a company's earnings, growth prospects and fair value, making the coverage gap a significant information problem. The core issue is that analyst capacity has failed to keep pace with the rapid expansion of Kosdaq listings.

The number of Kosdaq-listed companies rose from 1,468 in 2020 to 1,819 this year — an increase of 351 over five years. The number of companies receiving research coverage also grew over the same period, from 461 to 730. However, between 2022 and 2023, coverage actually declined even as the total number of listings continued to rise, showing that growth in listed companies does not automatically translate into broader analyst coverage.

Research also tends to cluster around a handful of prominent stocks. Among companies that received at least one research note in the past year, the 126 firms included in the Kosdaq 150 index averaged 24 notes each. The 604 companies outside the index averaged just five. The gap reflects a broader trend of analyst attention concentrating on marquee names, leaving small- and mid-cap stocks increasingly underserved.

Number of Kosdaq-listed companies receiving brokerage research coverage
Number of Kosdaq-listed companies receiving brokerage research coverage

Analyst research notes are a primary channel through which investors receive information on a company's earnings, industry outlook and competitive landscape. Their importance grows for companies with limited public information or complex business structures — yet a large share of small- and mid-cap Kosdaq firms receive no brokerage coverage, leaving investors without adequate information.

A shrinking analyst workforce has deepened the information gap. Kim Jun-seok, a senior research fellow at the Korea Capital Market Institute, found that the number of domestic equity analysts fell from roughly 600 in 2015 to around 400 in 2024. Over the same period, the number of brokerages publishing research on listed companies dropped from 36 to 30.

Kim attributed the contraction to falling demand for analyst research notes as passive investment has expanded and investors have diversified their information sources. Because research notes in South Korea are largely distributed free of charge, generating direct revenue from them is difficult, which has reduced the business case for maintaining large research operations. As a result, analyst coverage has concentrated on large-cap listings while small- and mid-cap companies have been pushed further into the analytical blind spot, he said.

"The more analyst activity contracts, the wider the investment information gap becomes — and the weaker the market's ability to monitor corporate management," Kim said. "This widens information asymmetry, prevents companies from being properly valued, and can act as a discount factor on share prices."

Efforts to address the coverage gap are under way. The Korea IR Consultants Association's research center and the Korea Exchange are in discussions on expanding coverage to companies that have not yet received any research notes. Jin Seong-hun, a group head at the Korea Kosdaq Association, said the two bodies are discussing a rotating system under which analysts would write research notes on companies that have not yet received any coverage.


hajun825@heraldcorp.com