Kosdaq Triggers Record Third Straight Buy Sidecar as Index Jumps 5.9%

The Kosdaq surged for a third straight trading day on Aug. 4, leaving the tech-heavy index within striking distance of the 800 level. Buying was strong enough to trigger a buy sidecar for an unprecedented third consecutive session. The Kosdaq also outperformed the Kospi for a second day as sector rotation spread from robot shares to biotech, secondary batteries and semiconductor materials, parts and equipment, with expectations for single-stock leverage curbs and Kosdaq-boosting policies adding momentum.

Money Shifts to Kosdaq Growth Stocks

The Kosdaq rose 5.88% to close at 780.72 on Aug. 4. That followed gains of 11.63% on July 31 and 2.44% on Aug. 3, extending the rally to three sessions. It was the index’s first three-session advance since June 11 to June 15, roughly a month and a half ago.

Heavy buying from the open triggered a buy sidecar, which halts the validity of program buy orders for five minutes. The measure was also activated on July 31 and Aug. 3. The Korea Exchange said this was the first time a buy sidecar had been triggered for three straight trading days on the Kosdaq market.

After robot stocks soared the previous day, biotech and secondary battery shares led gains on Aug. 4. Alteogen, the largest company on the Kosdaq by market capitalization, climbed 9.29%, with biotech stocks rallying across the board.

Ecopro and Ecopro BM, which released earnings that day, rose 5.94% and 5.89%, respectively. Ecopro said in a filing that second-quarter consolidated operating profit more than doubled from a year earlier to 32.9 billion won, helped by strong lithium operations. Ecopro BM posted second-quarter consolidated revenue of 576.7 billion won and operating profit of 18 billion won.

The Kospi closed 1.62% higher at 6,358.95. The benchmark fell as low as 6,080.25 during the session before reversing course late in the day. The rebound followed a 5.12% slide a day earlier, but its gain still trailed the Kosdaq.

Brokerages said sector rotation from large-cap semiconductor shares into Kosdaq growth stocks was continuing. “As weakness in large semiconductor stocks on the main board persists, funds are shifting into the Kosdaq market, allowing the Kosdaq to maintain a stronger trend than the Kospi,” Lee Kyung-min, an analyst at Daishin Securities, said.

Leverage Curbs Draw Institutional Money

Policy changes are also being cited as a driver of the Kosdaq’s strength. Regulations on single-stock leveraged products that took effect on July 31 are easing the concentration of flows into large semiconductor names and redirecting money into the Kosdaq, analysts said. “Funds leaving semiconductors are moving into pharmaceuticals, biotech and robot stocks,” Lee Jae-won, an analyst at Yuanta Securities, said. The leverage curbs are reducing crowding and creating a spillover effect into small- and mid-cap growth shares, he added.

Expectations are also rising that money from the recently popular National Growth Fund will flow into the Kosdaq market. Measures aimed at revitalizing the market, including a penny-stock delisting system introduced this month and a tiered Kosdaq framework due next year, also buoyed sentiment. “Expectations tied to Kosdaq revitalization policies added momentum to the index’s rise,” Lim Ji-eun, an analyst at KB Securities, said.

Heavy institutional buying also underpinned the rally. Institutions were net buyers of 544.7 billion won worth of Kosdaq stocks on Aug. 4. Their cumulative net purchases over the past three trading days reached 1.014 trillion won. Individuals were net sellers of 769.9 billion won, while foreigners sold a net 244.3 billion won. “The Kosdaq is extending a technical rebound as institutional flows have come in for three straight sessions,” Kim Seok-hwan, an analyst at Mirae Asset Securities, said.

Despite the recent rebound, the index remains well below earlier levels. The Kosdaq is still 10.1% below 868.41 on July 3, and 36.3% below its recent peak of 1,226.18 on April 27. To reach the “Kosdaq 3000” target championed by the Democratic Party in late January, the index would have to nearly quadruple.

Kang Jin-kyu, Hankyung.com reporter josep@hankyung.com