[DigitalToday reporter Sangyeop Oh] The KOSPI has surged since the start of the year and is closing in on the 5,000 mark. Attention is turning to whether the Kosdaq can also reclaim 1,000 and usher in the so-called "Cheonsdaq" era.

On Jan. 8, the Kosdaq index closed at 947.39, down 8.58 points, or 0.90 percent, from the previous session. It has looked sidelined compared with the KOSPI, which has been posting record highs day after day. Still, the market sees a high possibility for the Kosdaq this year as government measures to invigorate the market align with improving corporate earnings.

First is an overhaul of market quality. The Korea Exchange has sharply tightened delisting requirements for the Kosdaq market from this year. The market-cap threshold rose 3.75 times to 15 billion won from 4 billion won, and an issue is designated as under supervision if its market cap stays below 15 billion won for 30 consecutive trading days.

If it fails to meet the requirements over the next 90 trading days, it enters delisting procedures. As of Jan. 6, the number of Kosdaq-listed companies with a market cap below 15 billion won was estimated at 23 to 27. The delisting standards will be tightened in stages. In 2027, the thresholds rise to a 20 billion won market cap and 5 billion won in revenue, and in 2028 to 30 billion won and 10 billion won, respectively.

Sangho Lee, a research fellow at the Korea Capital Market Institute, analysed that if companies with interest coverage ratios below 1 for three consecutive years as of June each year since 2011 are excluded from the index and it is recalculated, the Kosdaq index would rise an additional 37 percent as of the end of June 2024.

The Korea Exchange eased review requirements for companies with core technologies in return for tightening delisting standards. It selected artificial intelligence, renewable energy and energy storage systems, and the space industry as core technology fields. It introduced tailored technology review standards that reflect industry characteristics.

A tailored technology special listing system previously limited to the bio sector will be expanded to next-generation core technology fields. The exchange plans to appoint specialist advisers by sector to secure expertise and speed in screening technology firms.

The government will inject more than 30 trillion won this year into advanced industries through a 150 trillion won National Growth Fund. By sector, 6 trillion won was allocated to AI, 4.2 trillion won to semiconductors, and 3.1 trillion won to future cars and mobility. Investment demand received so far totals about 100 cases worth 153 trillion won, with applicants ranging from large conglomerates to mid-sized and small firms.

The integrated investment account, or IMA, system introduced in November last year is also breathing life into the Kosdaq market. The IMA sets the mandatory investment share for venture capital at up to 25 percent, and as of 2028, 42.5 trillion won is expected to be supplied to venture capital.

Yoonseon Tae, an analyst at KB Securities, said the IMA system brought inflows into small and mid-cap stocks. She said gains are expected in the Kosdaq market, which has been relatively sidelined, based on seasonality that typically shows strength in January and February, policy momentum and the possibility of pushing ahead with measures to invigorate the Kosdaq market.

Retail investor money is also flowing heavily into the Kosdaq market. In December last year, retail investors were net buyers of 1.33 trillion won worth of shares on the Kosdaq market. That contrasts with November the same year, when they were net sellers of 480 billion won. In the KOSPI market, retail investors sold 8.99 trillion won worth of shares in December last year.

Still, a recent sharp rise in treasury share disposals by Kosdaq-listed companies is cited as a variable in restoring market trust. Over about three months from October last year through Jan. 7, the value of treasury share disposals by Kosdaq-listed companies was 304 billion won, a 125-fold jump from a year earlier, when it was 2.4 billion won. That is comparable to the KOSPI, at 314 billion won, despite the KOSPI market being more than seven times larger.

In particular, many companies whose share prices have fallen, including Sungsan Delta Tech and Daejoo Electronic Materials, also moved to dispose of treasury shares. This is interpreted as an attempt to avoid mandatory cancellation of treasury shares under a revision to the Commercial Act and to secure friendly stakes by reviving voting rights on the pretext of paying employee bonuses. Experts point out that moves that appear to evade responsibility for shareholder returns when share prices are struggling could hurt investment sentiment.

Jungwhan Na, an analyst at NH Investment & Securities, explained that as the government's restructuring of listing and delisting and its policies to attract institutional investors gain momentum, the Kosdaq is expected to have more room for additional gains. He also said improved earnings in the IT sector driven by increased capital expenditure by large semiconductor companies would be a factor supporting a rise in the index.