Differences in opinion regarding ‘stability’ vs. ‘growth potential’ based on top segment still persist
Reviewing general segment support measures such as exchanges and tax benefits
The scope of announcements related to this month's Premium Week is still unclear.
(Seoul = Yonhap News) Reporter Kim Yu-hyang = The Korea Exchange is pursuing the introduction of the so-called 'KOSDAQ segment', which separately groups blue-chip companies in the KOSDAQ market, and is continuing to coordinate key contents such as inclusion criteria, number of stocks, and incentives.
Expectations for the KOSDAQ revitalization policy early this year supported the index's rise, but as announcements related to specific segments were delayed, the market's attention is focused on the timing of the detailed plan being released.
Among these, the exchange is said to be considering measures to support the general segment, such as tax benefits, in order to reduce the side effects of companies excluded from the top segment being perceived as 'non-prime companies'.
According to data submitted by the Korea Exchange on the 13th by the financial investment industry and People Power Party lawmaker Shin Dong-wook, a member of the National Assembly's Political Affairs Committee, the exchange formed a KOSDAQ segment advisory group in June and held a total of five face-to-face meetings over the past three months until the 11th.
The advisory group is comprised of 13 experts from academia, the venture industry, pension funds, asset management industry, investment banking (IB), and securities firms, and the meeting is said to have intensively discussed the criteria for incorporation of upper segments, operating methods, and incentives for each segment.
The biggest issue is by far the criteria for inclusion in the upper segment.
While some say that the top segment's brand value and the inflow of long-term investment funds should focus on companies with stable financial performance above a certain level, there are opposing opinions that it should also include companies with technological capabilities and growth potential in line with the characteristics of the KOSDAQ market.
In particular, the venture industry is known to be concerned that the KOSDAQ market may weaken the identity of the market if too much emphasis is placed on stability, as it supports the financing of growth companies and the return of investment by venture capital (VC).
Complementary measures to prevent polarization between the upper segment and the general segment are also a major topic of discussion.
It was discovered that the advisory group suggested that policy funding support and tax benefits, such as a KOSDAQ-exclusive policy fund, should be provided to reduce the market's negative perception of general segment companies.
It is known that the exchange is also considering related measures, but it is expected that it will take time to confirm tax benefits as they require consultation with relevant organizations such as tax authorities.
The appropriate number of stocks in the upper segment is also a concern.
There are concerns in the industry that if the number of stocks in the top segment is too small, volatility may increase as funds are concentrated in some stocks. However, at the same time, there is an opinion that in order to attract institutional investors and increase the value as a separate market, it is necessary to select stocks more strictly than the existing KOSDAQ 150.
The only thing that has been publicly specified so far is the name. At the KOSDAQ market's 30th anniversary event last July, the exchange announced that it was considering 'KOSDAQ Select', which is similar to the 'Global Select Market' of Nasdaq in the U.S., as the name of the upper segment.
Initially, the exchange planned to reveal the direction of segment reorganization at the KOSDAQ Market 30th anniversary event, but after delaying it, decided to present it at 'Korea Premium Week' held at the end of this month. However, as discussions continue, it is unclear to what extent the details will be disclosed at this event.
The exchange said, "As the introduction of the KOSDAQ segment is included in the government's 'capital market fundamental improvement plan,' we are pursuing the introduction of the KOSDAQ market segment system. We are comprehensively listening to the opinions of various stakeholders and preparing a specific plan. The implementation date has not been confirmed."
An official said, "As we are continuing discussions with related organizations, financial authorities, and the government, it is unlikely that the initially planned (KOSDAQ promotion/downgrade system) will be 100% applied as is. We are trying to find an appropriate middle ground, but the process of coordinating even detailed technical elements is taking time."
Another official explained, "The standard for dividing the promotion and demotion system must be determined in order to determine the number of target stocks," and added, "It has not yet been confirmed whether the standards for the KOSDAQ segment will be included in this month's announcement."
