KOSDAQ market ETFs recorded uniformly negative returns over the past month as the index hit seven new yearly lows since late May. As of July 7, KODEX KOSDAQ150 posted a 1-month return of -17.20%, with all nine KOSDAQ150-tracking ETFs and four KOSDAQ active ETFs showing double-digit negative performance, according to KOSCOM ETF CHECK data. The decline coincided with the May 27 launch of single-stock leveraged products for Samsung Electronics and SK Hynix, which analysts say drained liquidity from the broader KOSDAQ market into semiconductor large-caps. During the same period, KOSPI rose 2.3% while KOSDAQ fell 8.8%, widening the performance gap between the two markets. KOSDAQ's structure as a growth-focused market centered on pharmaceuticals and biotech — offering high risk in exchange for high returns — faced heightened competition from newly available high-return products backed by solid earnings in the semiconductor sector.
KOSDAQ ETFs Record Double-Digit Losses Over Past Month
All KOSDAQ150 index-tracking ETFs posted negative returns over the recent 1-month period. KODEX KOSDAQ150 returned -17.20%, while all nine KOSDAQ150 ETFs and four active KOSDAQ ETFs launched in March recorded double-digit losses, according to KOSCOM ETF CHECK data as of July 7.
Long-short ETF performance reflected the divergence between KOSPI and KOSDAQ. KODEX 200Long KOSDAQ150Short Futures — which buys KOSPI200 futures and sells KOSDAQ150 futures — returned 9.04%, ranking 26th among equity ETFs. The inverse strategy product, KODEX KOSDAQ150Long KOSPI200Short Futures, returned -12.63%.
KOSDAQ closed at 812.7 on July 7, marking a new yearly low in the 810s. The index set seven yearly lows over the past month: one on June 8, four consecutive lows from June 23, and two in July (823.98 on July 3 and 812.7 on July 7). Trading volume hit a yearly low of 6.1568 trillion won on July 6.
Analysts Attribute Decline to Liquidity Shift Toward Semiconductor Stocks
Financial industry experts analyzed that KOSDAQ's sharp decline resulted from investors selling KOSDAQ stocks and products to invest in semiconductor large-caps within the KOSPI market. The May 27 launch of single-stock leveraged products for Samsung Electronics and SK Hynix amplified the concentration into semiconductor large-caps.
Heo Jae-hwan, managing director at Eugene Investment & Securities, stated: "Single-stock leveraged products created investment opportunities for high-risk, high-return strategies. Demand for high-risk, high-return investments was pulled from the KOSDAQ market into single-stock leveraged products."
KOSDAQ is structured as a market focused on growth potential rather than earnings, composed of pharmaceutical and biotech sectors that offer high risk in exchange for large returns. However, as high returns became available from earnings-backed stocks like Samsung Electronics and SK Hynix, the KOSDAQ market faced increased marginalization.
Experts Cite Multiple Factors Needed for KOSDAQ Recovery
Park Seong-cheol, head of ETF Management Team 1 at Samsung Asset Management, stated: "While expectations for earnings improvement in large-caps centered on AI and semiconductors persist, KOSPI is likely to show relative strength. However, this can change depending on KOSDAQ stocks' earnings improvement and liquidity recovery."
Experts noted that KOSDAQ's rebound requires a combination of factors including government policy, interest rate cuts, and earnings improvement. Heo stated: "If inflation stabilizes and the market detects signals of rate freeze or cuts, sectors like pharmaceuticals and biotech will see smoother fundraising for clinical trials and other needs, allowing them to receive relatively high PERs (price-to-earnings ratios). Companies included in the first tier of the 'KOSDAQ tier system' could also see a reversal in sentiment."
Cautionary views also emerged. Lee Jae-won, researcher at Yuanta Securities, stated: "The KOSDAQ tier system's launch schedule has been delayed. Even if launched, there are concerns that liquidity will concentrate only on top stocks in the premium segment, meaning rotation into the KOSDAQ market remains negative."
FAQ
What caused KOSDAQ stocks to decline over the past month?
KOSDAQ hit seven new yearly lows since late May as liquidity shifted from the broader KOSDAQ market into semiconductor large-caps following the May 27 launch of single-stock leveraged products for Samsung Electronics and SK Hynix. Analysts stated that investors sold KOSDAQ stocks to invest in these high-return products backed by solid earnings.
How did KOSDAQ ETFs perform compared to KOSPI during this period?
All nine KOSDAQ150-tracking ETFs posted negative returns over the recent 1-month period, with KODEX KOSDAQ150 returning -17.20%. During the same period, KOSPI rose 2.3% while KOSDAQ fell 8.8%. Long-short ETFs reflected this divergence: KODEX 200Long KOSDAQ150Short Futures returned 9.04%, while the inverse strategy returned -12.63%.
What factors do experts say are needed for KOSDAQ recovery?
Experts cited a combination of government policy support, interest rate cuts, and earnings improvement as necessary for KOSDAQ recovery. Heo Jae-hwan of Eugene Investment & Securities stated that rate stabilization would improve fundraising conditions for pharmaceutical and biotech sectors, while Park Seong-cheol of Samsung Asset Management noted recovery depends on KOSDAQ stocks' earnings improvement and liquidity restoration.
