KOSDAQ fell 23.27% over one month ending July 16, recording the steepest decline among major global indices according to Investing.com data published on the 19th. The market closed at 1000.93 on the 18th of last month before sliding below the 800 level, hitting an intraday low of 749.76 on the 14th - the lowest in approximately one year. The decline stemmed from concentrated fund flows into large-cap semiconductor stocks, particularly after the launch of single-stock leveraged ETFs based on Samsung Electronics and SK Hynix, which drew liquidity away from the small- and mid-cap focused KOSDAQ market. South Korean government has implemented policy measures including December's comprehensive plan for technology IPO expansion and corporate delisting, followed by this year's addition of 5% KOSDAQ weighting to pension fund evaluation benchmarks and establishment of a dedicated KOSDAQ fund within the National Growth Fund to strengthen market liquidity infrastructure.
KOSDAQ Records 23.27% Monthly Decline
KOSDAQ's decline from 1000.93 on the 18th of last month to below 800 by July 16 marked the sharpest drop among global major indices tracked by Investing.com. Top market-cap stocks experienced significant losses, with Alteogen, EcoPro BM, and Rainbow Robotics falling over 20%, while Jusung Engineering dropped more than 6%. During this period, 1,147 stocks declined compared to only 592 that rose.
Large-Cap Fund Flows Drive KOSDAQ Weakness
The underperformance traces to the second half of last year's semiconductor large-cap rally, which shifted profit momentum and fund flows away from KOSDAQ's small- and mid-cap composition. The concentration intensified following the launch of single-stock leveraged exchange-traded funds using Samsung Electronics and SK Hynix as underlying assets. After these products launched, KOSDAQ broke below its 60-day and 120-day moving averages sequentially.
Government Implements KOSDAQ Support Measures
In December, the government announced comprehensive measures including expanded technology special listing, delisting of underperforming companies, and improved conditions for institutional investor entry. This year, authorities formalized the addition of 5% KOSDAQ weighting to pension fund evaluation benchmarks and established a KOSDAQ fund within the National Growth Fund.
Analysts Identify Bottom-Fishing Opportunities
Securities firms assess the recent decline as driven by technical and liquidity shocks rather than fundamental deterioration. Lee Jae-won, researcher at Yuanta Securities, stated: "If government policies ease the concentration of fund flows, the possibility of rotation into long-neglected small- and mid-cap growth stocks will increase. Bottom-fishing opportunities are also open for KOSDAQ stocks that simultaneously meet excessive decline and earnings per share upgrade criteria."
FAQ
What caused KOSDAQ stocks to fall 23.27% in one month?
The decline resulted from concentrated fund flows into large-cap semiconductor stocks, particularly Samsung Electronics and SK Hynix, which intensified after single-stock leveraged ETFs launched using these companies as underlying assets. This shift drew liquidity away from KOSDAQ's small- and mid-cap focused market.
What government measures support KOSDAQ stocks?
In December, the government announced comprehensive measures including expanded technology special listing and improved institutional investor conditions. This year, authorities added 5% KOSDAQ weighting to pension fund evaluation benchmarks and established a KOSDAQ fund within the National Growth Fund to strengthen market liquidity infrastructure.
