KOSDAQ reclaims 900…Foreigners and institutions swept up 1 trillion won

Pension funds pushing to increase KOSDAQ weighting

Foreigners flock after selling KOSPI

Biotech strong, Peptron jumps 10%

HPSP·RINO Industrial, semiconductor stocks rise

"Need to watch stimulus effect" cautious voices too

Market Inside

The KOSDAQ index surged nearly 4%, recording the second-largest gain of the year so far. The rise reflected growing expectations that the government's KOSDAQ revitalization policy will bring large-scale funds into a market that had been sluggish. Foreign and institutional investors swept up more than 1 trillion won in the KOSDAQ market.

Highest gain in 7 months

On the 28th the KOSDAQ index closed at 912.67, up 3.71%. It was the highest gain since April 10, when the U.S. announced it would defer reciprocal tariffs for one year (5.97%).

Foreign investor funds poured in after an exclusive report by the Korea Economic Daily that the government is preparing support measures for the KOSDAQ market. That day foreign investors were net sellers of 1.7121 trillion won worth in the KOSPI market while they were net buyers of 472 billion won worth in the KOSDAQ market. Institutional investors also bought 600.8 billion won worth in the KOSDAQ market. Individual investors were net sellers of 1.0221 trillion won.

It is analyzed that news of plans to increase pension funds' investment share in the KOSDAQ market, which is only 3%, attracted foreign capital. With domestic stock purchase quotas nearly full, there is expectation that if pension funds' weighting increases, the KOSDAQ market could see a full-fledged rebound.

The biotech sector showed strength. Peptron jumped 10.39% to 340,000 won after Eli Lilly decided to establish a global production base for its obesity treatment 'Mounjaro' in Korea. The market expected Mounjaro to be produced at Peptron's new Cheongju plant. KOSDAQ-listed obesity treatment companies such as G2G Bio (13.63%) and D&D Pharmatech (2.16%) were all strong. KOSPI-listed biotech stocks like Samsung Biologics (-2.37%) were weak.

Secondary battery companies on the KOSDAQ also rose in tandem. Enchem (16.39%), EcoPro (3.17%), and EcoPro BM (1.97%) were representative. Meanwhile, KOSPI-listed companies such as LG Energy Solution (-6.85%) and POSCO Future M (-2.24%) lagged.

Semiconductor sector investment also moved from the KOSPI market to the KOSDAQ market. HPSP (5.03%) and RINO Industrial (5.40%) rose sharply, while Samsung Electronics (-2.90%) and SK Hynix (-2.57%) were weak.

"A 'thousand-KOSDAQ' era opens" expectations

Investors are gauging whether the long-dormant KOSDAQ market will fully rebound on government stimulus. After the Moon Jae-in administration's early-November 2017 announcement of KOSDAQ revitalization policy, the KOSDAQ index began to rise. Following the detailed policy announcement on January 11, 2018, the index rose further for about three weeks. From November 2017 to January 2018 the KOSDAQ index rose 31.60%. Ha In-hwan, a KB Securities researcher, said, "The historical peak season for the KOSDAQ market is the first quarter," and "If the U.S. central bank (Fed) cuts rates next month, the KOSDAQ market could continue its rebound for the time being."

However, that 'KOSDAQ rally' did not last long. When the first Trump administration launched the U.S.-China trade war in earnest in early 2018, both the KOSPI and KOSDAQ indices fell. Han Ji-young, a Kiwoom Securities researcher, pointed out, "In the short term, the supply-demand environment for the KOSDAQ's leading sectors—biotech, secondary batteries, and semiconductors—will improve," but added, "The policy's influence and sustainability need to be watched further."

KB Securities singled out KOSDAQ-listed companies with high expected sales growth next year and rising recent trading: Lotte Tour Development, Seobu T&D, NextBioMedical, KMW, Koh Young, Philoptics, ISC, Nextin, and Dongwoon Anatech.

Reporter Seongmi Shim smshim@hankyung.com