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(EDITORIAL from Korea Times on Jan. 12)

All News 07:04 January 12, 2018

Boosting KOSDAQ market

Financial policymakers have set about to liven up the weak KOSDAQ market. Their policy package calls for allowing even companies with impaired capital to be listed on the tech-heavy stock exchange provided they have proven growth potential.

Among other KOSDAQ-bolstering steps unveiled by Financial Services Commission Chairman Choi Jong-gu, Thursday, are the setting up of a 300 billion won ($280 million) fund to invest into KOSDAQ-listed shares, most of which are undervalued, and encouraging pension funds to buy more shares of the tech-studded small firms.

The regulator's moves are aimed to funnel a larger amount of productive funds to small but innovative companies through the capital market. It is imperative to expand the demand base for the KOSDAQ, which serves as the funding source for promising startups, to prepare for the Fourth Industrial Revolution. The drastic relaxation of listing regulations in this regard is somewhat overdue.

Also desirable are the attempts to address an imbalance between the two markets _ the KOSPI and KOSDAQ _ by injecting more vigor into the latter.

A good intention does not always lead to a good result, however. The government's demand-replenishing measures should not result in hurting market integrity and losing investor trust: all the more so given the characteristics of the KOSDAQ where nearly 90 percent of the participants are local individual investors.

These investors, often called "a colony of ants," remember all too well how the government's similar attempt in the late 1990s riding on the global IT boom ended up getting nowhere. One in every two or three KOSDAQ firms faced delisting every year at the time. The market has yet to entirely shed its image of a casino.

One cannot stress enough the importance of investor protection devices. No amount of effort can restore market trust once it is lost.

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