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As Kospi skyrockets, Kosdaq remains stuck on the ground

Published: 14 Jan. 2026, 19:12 Updated: 14 Jan. 2026, 19:17

A screen in Hana Bank's trading room in central Seoul shows the Kospi closing at 4,723.1 points on Jan. 14, up 30.46 points, or 0.65 percent, from the previous trading session. The Kosdaq closed at 942.18 points, down 6.8 points, or 0.72 percent. [YONHAP]

While the Kospi has surged nearly 10 percent since the start of the year, the Kosdaq — Korea’s tech-heavy junior bourse — remains stuck in neutral.

As of Wednesday, the Kospi had risen 9.6 percent since Jan. 2, according to the Korea Exchange. Over the same period, however, the Kosdaq slipped 0.36 percent, falling from 945.57 to 942.18. Trading volume reflects the same trend: while average daily turnover on the Kospi has continued to grow, the Kosdaq remains stagnant at just over 10 trillion won ($6.8 billion).

“Despite the rally in large-cap stocks, the momentum hasn’t reached the Kosdaq,” said Lee Jae-won, an analyst at Shinhan Securities. “Following the JP Morgan Healthcare Conference [which ran from Jan. 12 to 15], foreign investors have begun offloading biotech stocks for profit, accelerating capital outflows from the Kosdaq.”

The Kosdaq has seen a 15-fold increase in listed companies since 2005, but the index still lingers below the 1,000-point level at which it began trading in July 1996. Analysts attribute its persistent underperformance to several factors, including weak foreign investor interest, sectoral concentration and high volatility.

Structural issues also play a role. While the U.S. Nasdaq — which the Kosdaq benchmarked — remains anchored by tech giants like Apple, Microsoft and Nvidia, the Kosdaq has seen repeated “exoduses” of its most stable companies to the Kospi, where listing is seen as more beneficial for branding and financing.

At the same time, weak corporate governance and the slow removal of “zombie companies” — financially troubled firms with little growth potential — have further eroded investor confidence in the Kosdaq.

In response, the Korean government is moving to reform the Kosdaq. It is expanding tax benefits for Kosdaq venture funds, introducing business development companies and encouraging securities firms to channel risk capital through investment management accounts.

U.S. dollar banknote and rising stock graph are seen in this illustration taken April 25, 2025. [REUTERS/YONHAP]

The Korea Exchange also recently proposed tougher listing maintenance standards, such as raising the minimum market cap threshold. In a report released Monday to the Financial Services Commission, the exchange estimated that 8.6 percent of Kosdaq firms could be delisted by 2029 if the new criteria are implemented — part of a broader plan to transform the Kosdaq from a “zombie listing venue” into a platform for “innovation and growth.”

Analysts say the Kosdaq could attract more investment if the government’s market-boosting policies succeed and investors begin to look beyond Kospi blue chip stocks.

KB Securities analyst Ha In-hwan pointed to previous Kosdaq rallies during past liberal administrations.

“Under former Presidents Roh Moo-hyun and Moon Jae-in, Kosdaq-focused policies led to gains of around 30 to 35 percent,” Ha said. “If the current tilt toward large caps fades, growth sectors like space and robotics could revive interest in the Kosdaq.”

Kang Jin-hyuk, a senior analyst at Shinhan Securities, said the Kosdaq stands to benefit directly from government policies aimed at boosting venture capital, and could emerge as an alternative if the Kospi enters a period of consolidation.

The local currency was quoted at 1,477.5 won against the greenback at 3:30 p.m., up 0.26 percent from the previous session of 1,473.7 won.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY PARK YU-MI [[email protected]]