[Inside Chodong] The 11-Year-Old KONEX That Isn't Growing

Only One New KONEX Listing This Year
No Transfers to KOSDAQ
Support Funds Cut Off, Market on the Brink of Collapse

The KONEX market will celebrate its 11th anniversary this coming July. Although it is about to turn 11 years old, the sentiment towards the KONEX market is heavier than ever. This is because the phenomenon of KONEX neglect has deepened, and it is no longer growing.

This year, only one new company was listed on the KONEX market. At the same time last year, five companies were newly listed. When the market opened in 2013, it started with 45 companies, and in 2016, 50 companies were newly listed, nurturing dreams of growth. However, in 2017, the number nearly halved to 29, and due to COVID-19 and other factors, it dropped to seven in 2021. In 2022 and 2023, the number doubled to 14, raising expectations that the market could regain its growth momentum, but this year, with only one listing, those hopes turned into disappointment.

No companies have transferred their listings to the KOSDAQ market this year. Last year, there were seven such cases. Over the past five years, an average of 10 companies have transferred to KOSDAQ annually, but this year, even transfers have ceased.

As trading volume continues to decline, the market’s vitality is also fading. As of the 30th, 23 stocks had zero trading volume. This accounts for 18.4% of the total 125 stocks. Including these, 40 stocks had fewer than 10 trades, meaning 32% of the stocks are traded in single-digit volumes.

KONEX opened in 2013 amid great interest. It was the third domestic stock market established after KOSPI and KOSDAQ in 17 years. Especially, there was high expectation for KONEX to serve as an incubator supporting the growth of venture and small-to-medium enterprises with technology and growth potential but insufficient funds, by discovering companies with bright growth prospects.

However, the initial intense interest gradually faded. It was hoped that companies with tremendous growth potential would enter KONEX, raise funds to grow, then transfer to KOSDAQ and continue growing steadily to eventually challenge the KOSPI market. But such a growth story did not materialize. No star company that attracted the market’s full attention was born, and even those that moved from KONEX to KOSDAQ failed to stand out and were buried. As the entry requirements for KOSDAQ were relaxed, more companies preferred to go directly to KOSDAQ without passing through KONEX. Since the level of market interest and the amount of funds that could be raised differed significantly between KONEX and KOSDAQ listings, it was natural for companies to prefer KOSDAQ.

In this situation, with support funds cut off, KONEX has been driven to the brink of collapse. The government completely cut the 'KONEX Market Revitalization Support Project' funding starting this year. This project, implemented since 2020, had supported 50% of the listing costs for companies listed on KONEX. However, as the number of new listings decreased and trading did not activate, the support was deemed ineffective, leading to the funding cut.

Calls for measures to revitalize KONEX have been raised for some time. Of course, the government has not been idle. The financial authorities took measures in 2019 to revitalize KONEX, such as lowering the basic deposit requirement for general investors, improving the block trading system, and reforming the fast-track transfer listing system to KOSDAQ. However, these measures were ineffective for KONEX, which had already fallen out of market attention. It is said that more bold measures are needed now to save KONEX.

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