KOSDAQ Stocks Rise 24% in Four Days as Margin Debt Falls 47%

The KOSDAQ stock market rose 24% over four trading days from April 31 to May 5, closing at 799.59 on May 5 with a 2.42% gain. The rebound followed a 47.4% plunge from the April high of 1,226.18 recorded on April 30. Analysts attribute the recovery to reduced forced selling pressure as margin debt declined 47.2% from 11.05 trillion won at the end of April to 5.83 trillion won on May 3, combined with institutional net purchases totaling 1.009 trillion won over the four-day period. The rally represents a technical rebound driven by improved price formation conditions rather than fundamental improvements in KOSDAQ-listed companies' earnings, according to market researchers.

Margin Debt Reduction Eases Forced Selling Pressure

KOSDAQ margin debt fell from 11.05 trillion won at the end of April to 5.83 trillion won on May 3, a 47.2% reduction, according to Shinhan Investment & Securities. Roh Dong-gil, researcher at Shinhan Investment & Securities, stated that while credit liquidation does not create new buying demand, the significant reduction in forced selling pressure lowered downside risk. The market experienced its first-ever three consecutive trading days of buy-side circuit breakers (program buy order suspension) starting April 31.

Institutional Buying and Policy Measures Support Market Recovery

Institutional investors net purchased 1.009 trillion won in KOSDAQ stocks over the four trading days. Lee Kyung-min, researcher at Daishin Securities, noted that institutional demand shifted from semiconductors to KOSDAQ, with pharmaceuticals and biotech leading the gains. Lee Jae-won, researcher at Yuanta Securities, identified policy expectations as additional support factors, including regulations on single-stock leveraged ETFs that reduced concentration in large-cap semiconductors, pension fund benchmark inclusion of KOSDAQ, and the establishment of KOSDAQ funds within the National Growth Fund.

Individual Investors Purchase KOSDAQ ETFs During Rally

Individual investors net purchased 93.8 billion won of KODEX KOSDAQ150 ETF over a one-week period (as of May 4), ranking third in individual net purchases, according to KOSCOM ETF CHECK. The ETF recorded a 12.54% return during this period. KODEX KOSDAQ150 Leverage ranked sixth in individual net purchases at 74.7 billion won, with a 20.97% return over the same period.

FAQ

Q: What caused the KOSDAQ stocks to rebound 24% from April 31 to May 5?

A: The rebound was driven by a 47.2% reduction in margin debt from 11.05 trillion won to 5.83 trillion won, which eased forced selling pressure, combined with institutional net purchases of 1.009 trillion won over the four trading days.

Q: How much did institutional investors buy in KOSDAQ stocks during the rally?

A: Institutional investors net purchased 1.009 trillion won in KOSDAQ stocks over the four trading days from April 31 to May 5.

Q: What was the KOSDAQ closing level on May 5?

A: The KOSDAQ index closed at 799.59 on May 5, up 2.42% for the day.