[KRX KOSDAQ Trading Volume 2600 Trillion] No Carrot Strategy This Year... Donghak Ants Forgetting Winter Sleep

Every Time Support and Deregulation Measures Are Announced
KOSDAQ Trading Volume Increases Significantly
First Surpasses 1000 Trillion in 2018

[Asia Economy Reporters Oh Ju-yeon and Geum Bo-ryeong] Looking at the periods when trading volume in the KOSDAQ market surged, they coincide with various government support measures and deregulation efforts. The Moon Jae-in administration emphasized revitalizing the KOSDAQ market after its inauguration, and the triple-digit trading volumes recorded since 2018 are closely related to this. Notably, this year saw active participation from individual investors, boosting the market with liquidity. With the government's 'Green New Deal' policy set to be fully implemented next year, economic normalization after the COVID-19 pandemic, and stimulus measures from various countries, there is growing anticipation that the domestic stock market will tread "an uncharted path" next year. Despite the market correction in December, individual investors are responding with buying.

◆ KOSDAQ Market Reacted to Each Policy

In the past, the KOSDAQ market's trading volume surged sharply in 1999, 2005, and 2015. The Kim Dae-jung administration, inaugurated in 1998, announced measures to revitalize the KOSDAQ market alongside plans to foster venture companies. The KOSDAQ market, a funding source for related venture firms, boomed, with trading volume soaring from the 1 trillion won level in 1998 to 106 trillion won in 1999, a 100-fold increase. In March 2000, the KOSDAQ index reached 2,834.40, and trading volume again increased more than fivefold within a year to 578.49 trillion won.

After the venture bubble burst and regulations tightened in 2003, the KOSDAQ market's trading volume shrank to around 155 trillion won but began to rise again under the Roh Moo-hyun administration in 2005, which introduced measures to revitalize venture companies. At that time, the KOSDAQ index rose 98.5% from 380.33 to 754.97, and trading volume increased to 446 trillion won within a year.

After 2015, the KOSDAQ market's trading volume surged to the 800 trillion won level again, coinciding with the Park Geun-hye administration's announcement of policies to foster creative economy and support fintech.

The KOSDAQ trading volume surpassed 1,000 trillion won for the first time in history in 2018 and maintained this level for two consecutive years, coinciding with the Moon administration's launch in May 2017, which aimed to nurture venture capital and grow startups into unicorn companies through KOSDAQ revitalization measures. Thanks to this, the KOSDAQ index surged to 932.01 on January 30, 2018, showing steady progress.

Next year, with the Moon administration's Green New Deal policy expected to be fully implemented, trading in the KOSDAQ market may be revitalized, especially among beneficiary companies. Attention is focused on whether the trading volume, which doubled this year compared to last year, can continue to increase next year.

◆ The Power of Individual Investors Also Stood Out in the KOSDAQ Market

Individual Investors Flocked During This Year's Market Crash

Net Buying in December for the First Time in 13 Years

Leveraged Buying Casts a Shadow on the Boom

Above all, the participation of individual investors, backed by abundant liquidity, is expected to bring forward the era of the 'KOSDAQ index 1000.' The so-called 'Donghak Ants' power this year was also prominent in the KOSDAQ market. Especially from March 19, when the domestic stock market hit bottom, individual investors bought KOSDAQ stocks, supporting the rebound. From March 19 to March 31, individual investors net purchased stocks worth 238 billion won, countering foreign and institutional investors who sold stocks worth 168.8 billion won and 49.8 billion won, respectively. The KOSDAQ index, which bottomed at 428.35 on March 19, rose 32.85% to 569.07 by March 31.

The Donghak Ants also contributed to raising the index by net buying 346.5 billion won worth of stocks between December 9 and 21, during the ongoing KOSDAQ rally. Through the COVID-19 phase, individual investors have established themselves as a key pillar of the domestic stock market.

As individual investors' participation increased, the scale of 'leveraged buying'?borrowing to invest in stocks?also steadily grew. The KOSDAQ market's credit loan balance, which was around 5.14 trillion won at the beginning of the year, increased to 9.6 trillion won as of the 21st. Although this is less than the KOSPI market's credit loan balance of 9.79 trillion won, when comparing market capitalization, the proportion of leveraged buying in the KOSDAQ market is higher.

◆ Will the KOSDAQ Index Reach 1000 Next Year?

Buying Momentum from January's Index Rise

Full-Scale Green New Deal Next Year

Expectations Whether the Index Can Break 1000

This December saw a change in individual investors' supply and demand for the first time in 13 years, influencing the market. Every December, individuals typically reduce their holdings in the KOSDAQ market to avoid year-end capital gains tax. Last December alone, they sold over 900 billion won worth of stocks to lower their holdings. However, this year, they have shown net buying in December unusually. From December 1 to 22, individuals purchased 1.43 trillion won worth of stocks in the KOSDAQ market. This is interpreted as taking advantage of the recent market correction, expecting the 'January effect' where the KOSDAQ index rises at the start of the year.

Moreover, the Korea Exchange has announced efforts to discover and nurture market-leading stocks that will open the era of KOSPI 3000 and KOSDAQ 1000, further raising expectations for a market rise next year.

Son Byung-doo, the new chairman of the Korea Exchange, said, "We will promptly improve market entry requirements focusing on market evaluation and growth potential so that unicorn companies leading future growth industries can list more easily. We are also considering restructuring the KOSDAQ market system to ensure that excellent technology companies can list on KOSDAQ."

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