Small and Mid-Cap Stock Returns Surpass Large Caps... Relatively Free from Regulatory Issues

From January 4 to October 1 this year, KOSPI Large-Cap Stocks Rose Only 1.61%
KOSPI Mid-Cap and Small-Cap Stocks Increased by 17.74% and 22.70% Respectively During the Same Period

[Asia Economy Reporter Gong Byung-sun] This year, the returns of small and mid-cap stocks have outperformed large-cap stocks. This is interpreted as an increase in investment attractiveness due to relatively fewer regulatory issues.

According to the Korea Exchange on the 4th, from January 4 to October 1 this year, large-cap stocks in the KOSPI rose only 1.61%. Conversely, during the same period, mid-cap and small-cap stocks rose 17.74% and 22.70%, respectively. In the KOSPI market, large-cap stocks are classified as the top 1?100 by market capitalization, mid-cap stocks as 101?300, and the rest as small-cap stocks.

Samsung Electronics, the company with the largest market cap, fell 9.63% during this period. Other stocks such as SK Hynix (-15.61%), Celltrion (-30.92%), LG Household & Health Care (-17.84%), SK Biopharm (-40.24%), and NCSoft (-36.09%) also dropped significantly.

On the other hand, small and mid-cap stocks ranked high in KOSPI price gains. Ilseong Construction, classified as a small-cap stock, recorded 478.95%, and Kolon Plastics 368.82%. Mid-cap stocks such as Next Science and Hyosung Advanced Materials showed gains of 418.52% and 381.21%, respectively.

Small and mid-cap stocks also showed strength in KOSDAQ. During the same period, mid-cap stocks ranked 101?400 in KOSDAQ market cap and small-cap stocks below 400 recorded growth rates of 3.70% and 10.63%, respectively, while large-cap stocks ranked 1?100 fell 2.49%.

The early-year rally was led by large-cap stocks. However, while large-cap stocks in KOSPI showed sideways movement, a rotation of buying interest seeking investment returns shifted to small and mid-cap stocks. Additionally, large-cap stocks had limited room for further gains after already rising significantly, and regulatory issues targeting large platform companies also held them back.

Small and mid-cap stocks are seeing upward revisions in earnings estimates, centered on secondary batteries. Furthermore, they are relatively free from foreign net selling due to regulatory issues, suggesting sufficient potential for price increases. However, there are also views that if interest rates rise, an environment unfavorable to small and mid-cap stocks may be created, leading to short-term profit-taking desires.

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