South Korean individual investors are increasingly shifting their focus to the Korea Securities Dealers Automated Quotations (KOSDAQ) market, driving up trading volumes and fueling a surge in credit-based investments, according to data released Friday by the Korea Exchange. The shift comes as the KOSDAQ index has experienced renewed interest, spurred by government policies aimed at revitalizing the market and expectations surrounding the robotics and secondary battery sectors.
As of February 23, individual investor participation in KOSDAQ trading accounted for 68.97% of the market, a significant increase from 48.11% in January. This surge coincides with a decrease in institutional and foreign investor activity, though the KOSDAQ’s average daily trading volume has remained robust, decreasing slightly from 14.9121 trillion won in January to 13.4903 trillion won. This represents a 78.73% increase compared to the 7.5475 trillion won average daily trading volume in 2023.
Conversely, individual investor participation in the Korea Composite Stock Price Index (KOSPI) has declined, falling from 48.11% in January to 45.93% this month. While the KOSPI has seen substantial gains, rising nearly 12% in February and approaching the 30 trillion won mark in average daily trading volume, individual investors have adopted a more cautious approach.
The increase in KOSDAQ activity is also reflected in a rise in credit-based investments, or “빚투” (debt investment), a leveraged investment strategy. While KOSPI margin loan balances peaked on February 10 at 21.1854 trillion won before decreasing to 20.9771 trillion won on February 20, KOSDAQ margin loan balances have steadily increased, reaching 10.6613 trillion won on February 20.
The secondary battery sector, particularly stocks like EcoPro and EcoPro BM, has been a primary beneficiary of this trend. According to data from Korea Composite Stock Price Index (KOSCOM), EcoPro BM and EcoPro have seen increases of 83.8 billion won and 37.1 billion won, respectively, in margin loan balances this month. Analysts attribute this to expectations of increased demand for batteries in the robotics industry and the stabilization of lithium prices.
EcoPro experienced a dramatic surge on January 28, rising 21.53% during intraday trading and briefly surpassing EcoPro BM in market capitalization. The company’s stock reached a 52-week high of 169,700 won, positioning it as the second-largest company on the KOSDAQ, trailing only Alteogen. The gap between EcoPro and Alteogen narrowed to between 50 billion and 60 billion won, intensifying competition for the top spot.
EcoPro BM also saw a significant boost, with its stock price increasing by 15.28% to 124,500 won on February 5, following the announcement of a better-than-expected second-quarter operating profit of 49 billion won – significantly exceeding the 12.3 billion won projected by securities firms.
The South Korean government has signaled its commitment to bolstering the KOSDAQ market, setting a new target of 3,000 after achieving its initial goal of 5,000 for the KOSPI. Recent policy initiatives, including the “KOSDAQ Trust and Innovation Enhancement Plan” announced in December and the “Listing Delisting Plan for Distressed Companies” unveiled this month, aim to improve market integrity and attract investment.
