All 23 Kosdaq ETFs Sink Into Negative Territory Over One Month, Active Funds Also Hit

Every exchange-traded fund investing in South Korea’s Kosdaq market posted a loss over the past month, effectively wiping out returns across the sector.

All 23 Kosdaq ETFs listed on South Korea’s stock market, excluding leveraged and inverse products, posted negative returns in the month from June 19 to July 20, according to the Korea Exchange. Passive products tracking the Kosdaq 150 Index, including KODEX Kosdaq150, down 25.67%, and TIGER Kosdaq150, down 25.58%, all fell about 25%. ETFs tracking Kosdaq thematic indexes, such as Kosdaq Global and Kosdaq150 IT, also posted losses. SOL KosdaqTOP10, which focuses on the largest Kosdaq stocks by market capitalization, posted the steepest decline, falling 32.02% over the period.

Active ETFs also failed to avoid the slump. TIME Kosdaq Active fell 26.09%, KoAct Kosdaq Active lost 24.36%, PLUS Kosdaq150 Active dropped 23.90%, TIGER Kosdaq Active slid 23.29% and MIDAS Kosdaq Active fell 20.02%. DS Kosdaq Active, which listed on July 14, has dropped 8.15% since its debut.

Retail investors continued buying the dip despite the losses. KODEX Kosdaq150, the largest Kosdaq-related ETF by net assets, drew 296.5 billion won over the past month. DS Kosdaq Active attracted 10.6 billion won in its first week after listing, while TIME Kosdaq Active and TIGER Kosdaq Active posted net inflows of 7.6 billion won and 6.2 billion won, respectively, over the same period. Investors expecting a rebound in the Kosdaq kept putting money to work, but most are now sitting on losses.

Brokerages say the Kosdaq has entered a historically severe period of neglect as investor flows concentrate in large semiconductor stocks. Yoon Jae-hong, an analyst at Mirae Asset Securities, said regulations on single-stock leveraged ETFs could help ease some of that concentration. He added that a rebound could take shape if the government’s Kosdaq market support measures and policy momentum from the National Growth Fund gather force.

Yang Ji-yoon, Korea Economic Daily reporter yang@hankyung.com