Tech-heavy Kosdaq is thriving
For the first time in nearly seven years, the secondary Kosdaq exchange that covers riskier small-cap IT companies surpassed the 600 mark on Thursday, as more investors shun large-cap shares that are susceptible to macroeconomic conditions.
The Kosdaq closed at 600.81, up 0.43 percent. Market analysts say the tech-heavy market has achieved qualitative growth in recent years.
“Top companies listed on the Kosdaq showed remarkable growth, while there are new Kosdaq companies supported by government policy,” said Lee Nam-yong, an analyst at Samsung Securities.
The Kosdaq itself also is benefiting from the government as it plans to foster content, game and media industries as new growth engines for the economy.
Representative promising shares on the Kosdaq are those of financial technology (fintech), mobile game and biotechnology companies.
The growth of the global semiconductor market also is contributing to the market’s rise as shares of related Korean businesses are climbing, Lee added.
The growth of the Kosdaq has been remarkable in recent years, as an increasing number of retail investors put borrowed money into Kosdaq-listed businesses. Both the index and trading volume of the market are on the rise.
As of Thursday, total market capitalization stood at 158 trillion won ($144.8 billion), also a record.
According to the Korea Financial Investment Association, the average value of shares traded daily surged more than 35 percent to 2.72 trillion won as of January, compared to a year earlier. The average trading volume of shares stood at 461 million, up 30.1 percent during the same period.
Many analysts say the growth of the Kosdaq will be maintained for the time being.
“Kosdaq shares are expected to rise further because they are less affected by the global slowdown and macroeconomic conditions, such as falling oil prices, unlike large-cap shares on the Kospi,” said Yim Sang-kuk, a researcher at Hyundai Securities. “On the Kospi, there are large-cap shares that are directly affected by low growth and low oil prices, such as petrochemical, chemical and shipbuilding shares.” According to the Korea Exchange, the proportion of traditional manufacturers and hardware makers, which used to account for 49 percent of the Kosdaq, shrank to 40 percent last year, which has helped reduce risks from external factors.
Contrary to the upbeat mood in the Kosdaq, the benchmark Kospi is expected to struggle for a while longer. The global economy’s slide into a protracted slowdown, with international oil prices plunging and foreign exchange rates fluctuating, is expected to hurt Korean conglomerates that largely rely on exports. Investors are bypassing those large companies, analysts say, and looking to their smaller brothers.
But some experts are skeptical the Kosdaq’s good fortune will last.
At the beginning of every year, the Kosdaq market tends to react immediately to the government’s new policies, noted Seo Dong-pil, a researcher at IBK Investment & Securities.
BY SONG SU-HYUN [ssh@joongang.co.kr]
with the Korea JoongAng Daily
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