KOSDAQ Exchange Introduces KOSDAQ Select to Boost Strong Companies and Remove Weak Ones

Attendees participate in a commemorative ceremony at the KOSDAQ 30th anniversary event held at the Conrad Hotel in Yeongdeungpo, Seoul, on July 1. From left: Kim Se-wan, head of the Capital Market Research Institute; Song Byeong-jun, chairman of the Venture Business Association; Oh Gi-hyeong, chairman of the Korea Premium K-Capital Market Special Committee; Jung Eun-bo, chairman of the Korea Exchange; Lee Ok-yeon, chairman of the Financial Services Commission; Lee Dong-hoon, chairman of the KOSDAQ Association; Kim Hak-kyun, chairman of the VC Association; Hwang Seon-o, deputy head of the Financial Supervisory Service. [Photo by Yoo Dae-gil]

The Korea Exchange is set to introduce the "KOSDAQ Select" segment to distinguish between strong and weak companies as it marks the 30th anniversary of the KOSDAQ market. This initiative aims to enhance the exit of struggling firms while increasing listings of innovative companies, thereby restoring trust in the KOSDAQ market.

On July 1, the exchange held a ceremony at the Conrad Hotel in Yeongdeungpo, Seoul, to celebrate the KOSDAQ's 30th anniversary and announced a roadmap for the market's development, which includes the new segment.

Choi Ji-woo, executive director of the KOSDAQ market division, stated, "The KOSDAQ has a structural issue where both strong and weak companies coexist, making it difficult for investors to differentiate between them, leading to an overall undervaluation of the market. We will establish the KOSDAQ Select segment to ensure that companies with growth potential and stability receive fair evaluations within KOSDAQ."

The exchange plans to develop new indices based on this segment and encourage the launch of exchange-traded funds (ETFs) to set investment criteria for institutional investors while reducing incentives for companies to switch to the KOSPI. The segment will operate on a tiered system, allowing for regular evaluations and movement between companies.

To restore market confidence, the delisting system will also be strengthened. Starting today, companies with a market capitalization below 20 billion won and penny stocks will be subject to stricter listing maintenance requirements, gradually increasing the criteria for retaining listings to facilitate the exit of struggling firms. The exchange will also shorten the substantive review process and tighten the cumulative penalty points for inadequate disclosures.

The exchange anticipates that the number of companies facing delisting decisions this year will rise to around 88, compared to 38 last year.

In addition, the exchange will focus on nurturing innovative companies. It plans to expand technology-based special listings in advanced industries such as AI, biotechnology, semiconductors, and defense, while enhancing industry-specific review standards and technology evaluation systems. The exchange will also improve investor access to information by expanding analysis reports on generative AI-based companies.

Jung Eun-bo, chairman of the Korea Exchange, emphasized, "We will swiftly remove weak companies and allow innovative firms to fill their places, creating a virtuous cycle to restore trust in the KOSDAQ market. Through structural reforms, we aim to elevate KOSDAQ into a market where global innovative companies gather."

Lee Ok-yeon, chairman of the Financial Services Commission, added, "We will pursue fundamental and structural improvements to ensure that KOSDAQ becomes a destination for growth stock investments and the world's leading technology stock market, while simultaneously supporting innovative companies, restructuring the market, and protecting investors to create a trusted market."

The KOSDAQ market was launched in 1996 with 341 listed companies and a market capitalization of 7 trillion won. In January of this year, it surpassed a market capitalization of 600 trillion won for the first time, and as of the end of last year, the number of listed companies had increased to 1,827. The KOSDAQ index regained the 1,000-point mark in January and reached 1,226 points in April, setting a new high since the COVID-19 pandemic.

* This article has been translated by AI.