KOSDAQ Market: Challenges and Ecosystem Evolution

The KOSDAQ market's listed companies and market capitalization surged, but the index dropped by -2%, posing challenges for investors.

### The Dramatic Growth and Struggles of KOSDAQ
The KOSDAQ has experienced a 55-fold increase in market capitalization since its launch in 1997, but it is currently facing a -20% return rate over 27 years. This is in contrast to the KOSPI, which has seen a 28-fold increase since the 1980s. The KOSDAQ's reference point of 100 in 1997 has been adjusted to 1, impacting its perceived performance.

### The Comparison Between KOSDAQ and NASDAQ
The NASDAQ has increased by almost 14,500% since 1996, while the KOSDAQ has only seen a -20% return during the same period. The KOSDAQ market was actually created based on the NASDAQ, focusing on technology and growth stocks, but has experienced a significant drop in the stock price. The KOSDAQ has rapidly increased the number of listed companies, leading to a 55-fold growth in market capitalization, but has also accumulated a high number of delisted stocks, indicating a challenging environment for investors.

### The Impact of Company Listings on the KOSDAQ Market
The KOSDAQ market has seen a large number of companies pass through, but delistings have little surface impact on the index calculation. Despite a significant influx of funds into newly listed companies, the KOSDAQ index does not seem to rise accordingly, raising questions about where the money is going. The ease of listing for deficit and unrealized profit companies has led to a high number of new listings, but the reality is that investors struggle to recoup their investments, leading to uncertainty and a growing number of shares without repurchase.

### The KOSDAQ Villain Olympics and the Challenge of Zombie Companies
Many companies on the KOSDAQ are struggling to pay interest despite making operating profits, with 42% falling into this category. The KOSDAQ is conducting a substantial review of 178 listed companies, including suspending trading for six firms. There have been over 1,200 cases of embezzlement disclosure among the 179 listed companies, leading to a high number of cautionary and risky stocks.

### The Impact of Delisting Decisions on Companies
Companies facing delisting decisions are choosing to go to court to challenge the rulings. Gamma successfully sued the Korea Exchange to overturn a delisting decision, setting a precedent for other companies to follow. The process of challenging delisting decisions in court could result in trading suspensions lasting 3 to 7 years, causing a significant impact on the companies involved.

### Proposed Changes to the Stock Market Listing System
The trading suspension period for delisted companies has been extended from one year to two years, leading to criticism. There is a proposal to create a promotion system with first, second, and third leagues based on company performance. The aim is to make it easier for delisted companies to relist and to promote a healthier market environment.

### Potential Changes in the Korean Stock Market
There is a possibility of the KOSPI and KOSDAQ markets merging into a system with first, second, and third leagues, similar to the structure in Japan. The KOSDAQ 150 index, consisting of excellent companies, is not well-recognized or utilized by investors, leading to a decrease in its net assets. There are suggestions in some circles to create smaller, more prominent groups like the KOSDAQ 50 or KOSDAQ 100 to garner more attention and investment.

### Unclear Market Advice and the Call for Change
The speaker expresses a preference for the KOSPI market over KOSDAQ, citing the KOSDAQ's 20% decline over 27 years. There is a call for the rapid improvement of both KOSPI and KOSDAQ to increase their value for investors. The speaker emphasizes the importance of individual decision-making in investments until the market system undergoes a complete change.

### Understanding the Challenges of the KOSDAQ Market in South Korea
* 📈 Despite a 55-fold increase in market capitalization since its launch in 1997, the KOSDAQ index has actually **decreased by 20% over 27 years**, contrasting sharply with the NASDAQ's **1400% growth over the same period**.
* 📊 The number of listed companies on the KOSDAQ has increased **fivefold, from 341 to 1791**, but the index has not reflected this growth as expected, remaining at **around 800**.
* 🏛 The KOSDAQ market has faced criticism for being too lenient in listing requirements, with **42% of companies having an interest coverage ratio of less than 1**, leading to the classification of many as "**zombie companies**".
* 📉 178 companies have been delisted from the KOSDAQ since its inception, and there are currently **28 "warning stocks"** and **6 companies suspended from trading**, highlighting ongoing challenges in the market.
* 💰 Despite these issues, the KOSDAQ continues to attract new listings, with **80-110 companies being listed each year**, absorbing **2-3 trillion won in new funds annually**.
* 🏗 Proposed solutions include creating a **multi-tiered market system**, similar to Japan's JASDAQ, and making it easier for **delisted companies to relist after addressing their issues**.
* 📚 The speaker recommends a book written by investment experts who have successfully navigated the KOSDAQ market, aiming to help investors make **informed decisions** in this challenging environment.

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