Korea Exchange Selects Top 10 News in Securities and Derivatives Markets

Selected as the top news for 'KOSPI Surpassing 3000 and KOSDAQ Surpassing 1000'
Strong performance observed across various sectors including IPOs, overseas stocks, and foreign listings

(Provided by Korea Exchange)

[Asia Economy Reporter Gong Byung-sun] The Korea Exchange announced on the 29th that it had selected the top 10 major news stories that influenced the domestic securities and derivatives markets this year. As the domestic stock market was hot this year, words like ‘first’ and ‘all-time high’ frequently appeared in the top 10 news. Among them, the top news was the ‘KOSPI breaking 3000 and KOSDAQ breaking 1000.’

① KOSPI 3000 and KOSDAQ 1000 Breakthrough

The KOSPI closed at 3,031.68, up 63.47 points (2.14%) from the previous day, marking the first time it has surpassed 3,000 based on the closing price. On the 7th, a message celebrating the KOSPI breaking 3,000 was displayed on the electronic board at the Korea Exchange in Yeouido, Seoul. Photo by Hyunmin Kim kimhyun81@

The KOSPI surpassed 3000 for the first time ever on January 7 this year, supported by increased exports based on the global economic recovery and improved performance of domestic companies. The entry into KOSPI 3000 was the first since the index was announced on January 4, 1983, and came 13 years and 5 months after entering 2000 on July 25, 2007. Later, on July 6, it recorded 3305.21, setting an all-time high closing price.

KOSDAQ also surpassed 1000 points on April 12 this year, driven by the recovery of investment sentiment due to the global economic recovery and the strength of bio stocks such as COVID-19 diagnostics and treatments. It was the first time in 20 years and 7 months since September 14, 2000, when the IT boom occurred, that KOSDAQ recovered 1000 points.

② Surge in Overseas Stock Investment by Domestic Investors

Following last year, the U.S. stock market continued its solid rise this year, and with the direct investment craze among individuals, overseas stock investment by domestic investors increased significantly. According to the Korea Securities Depository, as of the 24th of this month, overseas stock settlement payments amounted to $390.8 billion (approximately 463.6842 trillion KRW), a 97% increase compared to $198.3 billion for the entire last year. The amount of overseas stock custody also increased by 59% to $74.6 billion as of the end of October, compared to $47 billion at the end of last year.

③ Record High IPO Amounts in KOSPI and KOSDAQ Markets

This year, the IPO public offering amount in the KOSPI market set a record high, supported by the activation of listings of future growth companies in the BBIG (Battery, Bio, Internet, Game) sectors. SKIET, which was listed this year, raised 2.2459 trillion KRW, KakaoBank raised 2.5526 trillion KRW, and Krafton raised 4.3098 trillion KRW, attracting investor interest.

The IPO public offering amount in the KOSDAQ market also recorded an all-time high of 3.6 trillion KRW. This was due to an increase in technology-special listing mainly among materials, parts, equipment, and bio companies. The total public offering amount for both KOSPI and KOSDAQ markets reached 20.8 trillion KRW, more than doubling the approximately 10.2 trillion KRW recorded in 2010.

④ Expansion of Individual Investors’ Participation in IPOs

From this year, the allocation of IPO shares to individual investors increased from the previous 20% to 30%, and more than half of the individual allocation adopted the ‘equal allocation’ method. In February this year, PNH Tech was the first to expand the individual allocation to 30% and proceed with the IPO, and starting with CNTOOS Seongjin, the equal allocation method was applied to individual investors’ IPO shares. CNTOOS Seongjin conducted a general public subscription in January this year. Kakao Pay was the first case to apply the equal allocation method to the entire individual IPO share.

⑤ Investment Craze in Future Industry Stocks such as Metaverse and Non-Fungible Tokens (NFTs)

This year, investors focused on future industry stocks such as the metaverse and NFTs, which rapidly emerged due to COVID-19. WIZWIG Studio, a metaverse-related stock, surged 80.55% in November alone, and Wemade, a representative NFT stock, rose about 161% in October.

Not only individual stocks but also exchange-traded funds (ETFs) related to these industries attracted investor interest, leading to large-scale capital inflows. The four metaverse ETFs, which were simultaneously listed in October this year, recorded a net asset value of 1.0109 trillion KRW as of the 9th of this month.

⑥ Partial Resumption of Short Selling and Korean-style Anti-Short Selling Movement

The Financial Services Commission decided to partially resume short selling from May 3 to stabilize domestic and global stock markets. On March 16 last year, the financial authorities had imposed a temporary ban on short selling for all listed stocks in the securities market in response to increased market volatility caused by COVID-19.

To minimize market shock, short selling was allowed only for large-cap stocks included in the KOSPI 200 and KOSDAQ 150. Additionally, the improved ‘Individual Lending System’ was operated to allow individual investors to borrow stocks through securities firms for short selling investments. Currently, individual investors can borrow stocks for 90 days through 28 securities firms.

Meanwhile, the Korean Stock Investors Union led a Korean version of the GameStop movement called the ‘K-Stop Movement.’ They focused on buying HL Biotech, which had the highest short selling balance in KOSDAQ, on July 15 this year.

⑦ Coupang Listed on the New York Stock Exchange

[Image source=Yonhap News]

On March 11 this year, Coupang successfully listed on the New York Stock Exchange. Subsequently, Market Kurly, Kakao Entertainment, Dunamu, and others also considered listing in the U.S., raising concerns about the overseas departure of K-unicorn companies.

In response, the Korea Exchange announced the ‘K-Unicorn Listing Activation Plan’ in April this year, including the use of joint voting agreements and the introduction of a review system focused on future growth to facilitate smoother domestic market listings for unicorn companies.

⑧ Spread of ESG (Environment, Social, Governance) Investment Culture

After COVID-19, global interest in solving environmental and social issues increased, and responsible investing considering ESG spread domestically as well. Accordingly, the Korea Exchange established an institutional foundation by promoting the phased mandatory disclosure of sustainability management reports and corporate governance reports so that companies actively disclose ESG information and investors can use it to expand responsible investing.

Furthermore, the Korea Exchange contributed to the expansion of ESG investment through the development of ESG-related indices and the listing of related ETFs and ETNs (Exchange-Traded Notes).

⑨ Record High Earnings of Listed Companies

As of the third quarter this year, the KOSPI market recorded cumulative sales of 1651 trillion KRW, operating profit of 143 trillion KRW, and net profit of 128 trillion KRW, all setting record highs. The KOSDAQ market also recorded all-time highs with cumulative sales of 157 trillion KRW, operating profit of 12 trillion KRW, and net profit of 11 trillion KRW as of the third quarter this year.

⑩ ETF Surpasses 500 Items and Net Asset Value Hits Record High

In August this year, the ETF market surpassed 500 items for the first time in 19 years since the market opened in 2002. This month, it increased to 529 items. The net asset value exceeded 70 trillion KRW in November this year.

It is interpreted that the growth of the ETF market was driven by the listing of various products such as sector, active, and overseas types, in addition to existing domestic market representative products.

Recently, ETF investment through pension accounts has been continuously increasing. The ETF balance in retirement pension accounts of the four major securities firms, which was 183.6 billion KRW in 2019, surged to 2.4151 trillion KRW in October this year. The increasing participation of individual investors in the market is also evaluated as contributing to the growth of the ETF market.

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