KOSDAQ surged 21.08% over three trading days from the 31st of last month to the 4th of this month, closing at 780.72 on the 4th with a 5.88% gain. The rally occurred as new regulations on single-stock leverage products took effect on the 31st of last month, raising the minimum deposit requirement to 30 million won and strengthening pre-trading education. Trading volume in 16 related leverage products dropped from 12.4485 trillion won on the 30th of last month to 1.033 trillion won on the 4th, with capital redirecting from semiconductor large-caps like Samsung Electronics and SK Hynix toward small-cap growth stocks in pharmaceuticals, biotech, and robotics.
KOSDAQ Gains 21% Over Three Days as Leverage Regulations Take Effect
On the 4th, KOSPI rose 1.62% to close at 6358.95, while KOSDAQ jumped 5.88% to finish at 780.72. Over the three trading days from the 31st of last month through the 4th of this month, KOSDAQ climbed 21.08%.
Financial authorities raised the minimum deposit for leverage products to 30 million won starting on the 31st of last month and strengthened pre-trading education requirements. Trading volume in 16 related products fell from 12.4485 trillion won on the 30th of last month to 1.033 trillion won on the 4th — a reduction to less than one-tenth of the previous level.
A market official stated that "domestic stock trading had been concentrated in semiconductor large-caps like Samsung Electronics and SK Hynix, and leverage products based on these stocks. However, as regulations including the raised minimum deposit took effect, the capital efficiency and accessibility of leverage products declined, and some capital that lost its destination turned toward KOSDAQ growth stocks that had relatively larger declines."
Capital Flows from Semiconductor Stocks to Small-Cap Growth Sectors
Industry analysts attribute KOSDAQ's strength to buying interest spreading from semiconductor large-caps to small and mid-cap stocks. As concentration in Samsung Electronics and SK Hynix (referred to as "Samjeonix" in the market) eased, capital is flowing toward relatively neglected KOSDAQ stocks.
KOSDAQ's relative price attractiveness appears to be stimulating capital movement. KOSDAQ broke through 1200 during trading in April but underwent sharp correction afterward. On the 29th of last month, it dropped to 630.99 during trading, marking its lowest level since December 2024.
Despite the recent sharp rebound, KOSDAQ remains about 16% below its end-of-last-year level of 925.47. Compared to KOSPI, which has risen over 50% since the start of the year, the return gap remains substantial. Securities industry observers view this rally as a process of recovering excessive declines rather than a new overheating phase.
Market Observers Note Sustainability Concerns After Rapid Rally
A market official assessed that "not all capital exiting the leverage market is moving to KOSDAQ, and profit-taking pressure could increase following the short-term surge." The official noted that the possibility of the rally continuing at the same pace as the three trading days that saw over 20% gains is limited.
FAQ
What caused KOSDAQ stocks to surge 21% over three trading days?
KOSDAQ rose 21.08% from the 31st of last month to the 4th of this month as new regulations on single-stock leverage products took effect. The regulations raised the minimum deposit to 30 million won and strengthened pre-trading education, causing trading volume in 16 related products to drop from 12.4485 trillion won to 1.033 trillion won. Capital redirected from semiconductor large-caps toward small-cap growth stocks in sectors like pharmaceuticals, biotech, and robotics.
Why did capital move from Samsung Electronics and SK Hynix to KOSDAQ stocks?
As regulations reduced the capital efficiency and accessibility of leverage products based on semiconductor large-caps, some short-term capital seeking high returns shifted to KOSDAQ stocks that had experienced relatively larger declines. KOSDAQ had dropped to 630.99 during trading on the 29th of last month, its lowest level since December 2024, creating relative price attractiveness compared to KOSPI, which has risen over 50% since the start of the year.
How sustainable is KOSDAQ's recent rally according to market observers?
Market officials stated that not all capital exiting the leverage market is moving to KOSDAQ, and profit-taking pressure could increase following the short-term surge. Securities industry observers view the rally as a process of recovering excessive declines rather than a new overheating phase, with limited possibility of continuing at the same pace as the three trading days that saw over 20% gains.
