The KOSDAQ index hit a 52-week low on July 21, falling to the 730 range during intraday trading despite consecutive government support policies aimed at revitalizing the market. The previous day's closing level fell below the index level recorded on Lee Jae-myung's presidential inauguration day. Daily trading volume declined 30.33% from 6.77 trillion won on June 4, 2025 to 4.72 trillion won on July 16, while KOSDAQ credit balances decreased 7.94% even as overall market credit balances surged 80.20%. Securities industry analysts attribute the decline to insufficient buying support and a structural shift from a 'trickle-down effect' where funds flowed from KOSPI to KOSDAQ, to a 'straw effect' where capital concentrates exclusively in large-cap semiconductor stocks like Samsung Electronics and SK Hynix. The Korean government has implemented multiple market reform measures since December, including listing criteria adjustments, delisting standard increases, pension fund allocation changes, and venture fund tax incentives, but capital inflows to KOSDAQ have not materialized.
KOSDAQ Trading Volume and Credit Balances Decline
According to the Korea Exchange, the KOSDAQ index recorded 734.01 at 9:37 AM on July 21, down 15.63 points (2.09%) from the previous trading day. The index temporarily fell to 731.82 during early trading. According to the Korea Financial Investment Association, KOSDAQ trading volume decreased from 6.77 trillion won on June 4, 2025 (government inauguration day) to 4.72 trillion won on July 16, a 30.33% decline. Credit trading showed divergent trends: overall market credit balance increased 80.20% from 18.51 trillion won to 33.36 trillion won during the same period, while KOSDAQ credit balance decreased 7.94% from 7.72 trillion won to 7.11 trillion won. A securities industry official stated that the simultaneous decrease in credit balances and trading volume indicates insufficient buying support for KOSDAQ.
Government Announces Market Reform Measures Since December
The Financial Services Commission announced the 'KOSDAQ Market Trust and Innovation Enhancement Plan' in December, outlining a shift to a 'high birth, high death' structure that facilitates innovative company listings while accelerating delisting of underperforming firms. The plan included expanding tax support for KOSDAQ venture funds and strengthening pension fund investment incentives to establish long-term institutional capital inflows. The government introduced customized technology special listing for national core technology sectors including AI, space, and energy, and established a field-specific technology advisory system in exchange listing reviews. In February, the government announced additional delisting reform measures. The market capitalization delisting threshold increased from 4 billion won to 150 billion won this year, with planned increases to 200 billion won this month and 300 billion won next year. Stocks priced below 1,000 won became subject to delisting requirements, and disclosure violation and complete capital erosion standards were strengthened. The maximum improvement period granted to companies during delisting reviews shortened from 18 months to 12 months. The exchange projected that annual delisting targets would increase from approximately 50 companies to around 150 companies under the revised framework. In March, the government detailed corporate selection systems and long-term capital inflow measures through capital market structural improvement plans. The plan segments KOSDAQ into Premium and Standard categories with inter-segment promotion and relegation systems, while creating representative indices and linked ETFs centered on top-tier Premium segment companies. In January, the government revised fund management evaluation guidelines, changing pension funds' domestic stock benchmark return from '100% KOSPI' to '95% KOSPI + 5% KOSDAQ'. The government committed to executing over 30 trillion won in National Growth Funds this year and supplying over 20 trillion won in new venture capital by 2028 through large investment banks' venture capital supply obligations.
Securities Industry Identifies Fund Concentration in Large-Cap Semiconductors
A securities industry official explained that past 'trickle-down effects' where funds flowed from KOSPI to KOSDAQ have been replaced by 'straw effects' where capital concentrates only in large-cap stocks like Samsung Electronics and SK Hynix. The official stated that while policies matter, sustainable emergence of growth companies that investors want to buy remains essential, and KOSDAQ activation policy effects will be difficult to perceive without new capital inflows to KOSDAQ. The securities industry views that time is necessary for government policy effects to translate into actual supply-demand improvements.
FAQ
What happened to KOSDAQ stocks on July 21?
The KOSDAQ index hit a 52-week low on July 21, falling to the 730 range during intraday trading and recording 734.01 at 9:37 AM, down 2.09% from the previous trading day.
Why are government support policies not improving KOSDAQ performance?
Securities industry analysts attribute policy ineffectiveness to structural fund concentration in large-cap semiconductor stocks like Samsung Electronics and SK Hynix, which prevents capital from flowing into KOSDAQ despite multiple government reform measures since December.
