It's Now Au's Turn... Investor Sentiment Shifts to KOSDAQ, Moving Toward Small and Mid-Cap Growth Stocks

Entering Kosdaq 950 Level in Sight
Investment Focused on Growth Industries like Semiconductors, Secondary Batteries, and 5G
'Debt Investment' Also Hits Record High... Credit Trading Loans at 9.5 Trillion Won

[Asia Economy Reporter Minwoo Lee] The KOSDAQ is surpassing the 950 mark, reaching its highest level in 20 years. This contrasts with the KOSPI, whose upward momentum has somewhat slowed. There is a growing outlook that investor sentiment is shifting from large-cap stocks to small and mid-cap growth stocks, resulting in a "leveling" phenomenon.

At 9:01 a.m. on the 18th, the KOSDAQ recorded 948.59, up 0.48% from the previous day. This is the highest level since it reached 964.6 intraday on March 25, 2002. When considering closing prices, an even greater record was set. The previous day closed at 944.30, marking the highest closing price in about 20 years since September 15, 2000, when it closed at 992.50. It has risen approximately 261.53% from its all-time low of 261.19 (closing price on October 27, 2008) during the global financial crisis about 12 years ago. Ten years later, on January 2, 2018, it closed at 812.45, recovering above the 800 level for the first time in a decade. Now, after two more years, it is approaching the 1000 mark.

Investor sentiment, which had been concentrated on the KOSPI that had shown a steep rise, appears to be shifting to the KOSDAQ. The KOSDAQ has shown consecutive gains this month, closing higher every day except the 8th. This contrasts with the KOSPI, which has fluctuated within a 'box range' around 2770 during the same period. Notably, foreign investors, who have been leading the index's rise, continued their buying momentum. Since the KOSPI first closed lower on the 8th of this month, foreign investors have net sold 3.1139 trillion KRW in the KOSPI until the previous day. Conversely, during the same period, they net bought 171.9 billion KRW in the KOSDAQ.

Previously, the upward trend was led by bio companies such as Celltrion Healthcare and Celltrion Pharm. Recently, however, the focus has shifted to semiconductors, secondary batteries, and 5G communication equipment. Celltrion Healthcare, the largest by market capitalization on the KOSDAQ, reached an all-time intraday high of 173,100 KRW on the 8th. However, it has steadily declined recently, fluctuating in the high 150,000 to low 160,000 KRW range. Seegene, ranked third in market cap, hit an all-time high of 322,200 KRW on August 10 but has since steadily declined. Although it has slightly rebounded recently, it still trades in the low 200,000 KRW range. Meanwhile, materials and components stocks have surged sharply, driving the index. SK Materials, a manufacturer of semiconductor and display process materials, recorded 322,400 KRW as of 10 a.m. that day, up about 22.7% from the closing price of 262,700 KRW at the beginning of the month. During the same period, secondary battery material companies such as EcoPro BM and Cheonbo also rose approximately 10.1% and 5.3%, respectively.

Yujun Choi, a researcher at Shinhan Financial Investment, explained, "When COVID-19 spreads, there tends to be a preference for new growth industries over traditional industries. Investor sentiment has concentrated in this area, leading to a leveling effect with the KOSPI and inflows of capital. We believe this has resulted in a differentiated market among individual stocks." Jaeseon Lee, a researcher at Hana Financial Investment, analyzed, "With the year-end approaching, issues such as decreased trading volume and the upcoming ex-dividend week suggest that the domestic stock market is likely to experience a rotation among stocks until the end of the year."

Meanwhile, as the KOSDAQ market rises sharply, the scale of 'debt investment'?investing in stocks using borrowed money?is steadily increasing. According to the Korea Financial Investment Association, as of the 16th, the outstanding balance of margin loans (money borrowed from securities firms by investors to buy stocks) on the KOSDAQ was 9.4853 trillion KRW, the largest ever recorded. Although this is less than the KOSPI's margin loan balance of 9.7617 trillion KRW, considering that the KOSPI's market capitalization was about 1,908 trillion KRW on the 16th, far exceeding the KOSDAQ's 373 trillion KRW, the proportion of debt investment in the KOSDAQ is much higher.

On the same day, the credit balance ratio also hit a record high of 3.02%. The credit balance ratio refers to the proportion of stocks purchased with borrowed money. The number of stocks with a credit balance ratio exceeding 10% was 8 in the KOSPI, whereas in the KOSDAQ, it exceeded three times that number at 26. Volatile pharmaceutical and bio sectors, including Korea United Pharm, BC World Pharm, Shinshin Pharm, Seorin Bio, and Jeil Bio, accounted for a significant portion.

This content was produced with the assistance of AI translation services.