Foreign Funds Head to KOSDAQ as Market Cap Hits Record 72 Trillion Won

Foreign investors' market capitalization in KOSDAQ has surpassed 72 trillion won, setting a new all-time high. Its share also rose above 11% for the first time in 2 years and 1 month. The rally in KOSDAQ stocks that foreign investors have been buying heavily was a key driver. Market watchers say the launch of the National Growth Fund, along with KOSDAQ market reforms, is creating an environment that could draw more money into the market.
According to the Korea Financial Investment Association (KOFIA) on the 27th, foreign investors' market capitalization in KOSDAQ stood at 72.1157 trillion won the previous day. It is the highest level on record since the KOSDAQ benchmark index was reset to 1,000 in 2004. Foreign market capitalization in KOSDAQ first moved above 70 trillion won on the 24th of last month, when it reached 70.7957 trillion won, and has continued to climb since then.
Foreign ownership in KOSDAQ also hit 11% the previous day, following 11.07% on the 22nd, marking two straight trading days above that level. KOSDAQ foreign ownership last exceeded 11% on April 24, 2024, at 11.95%, ending a gap of 2 years and 1 month. The highest foreign ownership share in KOSDAQ was 21.21% on September 3, 2004.
The strength of stocks that foreigners bought heavily helped lift market capitalization. So far this month, foreigners have sold a net 4.12184 trillion won in KOSPI, but bought a net 245.13 billion won in KOSDAQ.
In particular, they bought 354.6 billion won worth of FADU, 150.6 billion won of Rainbow Robotics, 138.5 billion won of EcoPro BM, 117.2 billion won of Seojin System Co., Ltd., and 109.9 billion won of Hana Micron. This month, those stocks have risen 49.49% for FADU, 10.24% for Rainbow Robotics, 3.64% for EcoPro BM, 32.44% for Seojin System Co., Ltd., and 18.39% for Hana Micron.
Market analysts say foreign inflows could expand further. With the launch of the National Growth Fund on the 22nd expected to boost investment in growth stocks, investor interest in KOSDAQ may rise. As investors are already growing weary of KOSPI, which has surged 95.26% from the start of the year, some expect a shift of money into KOSDAQ.
Some also say the KOSDAQ promotion and relegation system, which the Financial Services Commission (FSC) is reportedly considering introducing, could trigger additional inflows. FSC Chairman Lee Eok-won said on the 21st, "Looking at Nasdaq, companies were able to create new opportunities for innovation by moving back up through a promotion and relegation system," adding, "It can also build trust in the market."
Lee Sang-heon, an analyst at iM Securities, said, "The 60 billion won allocated to the National Growth Fund is negligible compared with KOSDAQ's total market capitalization of about 72 trillion won." He added, "However, the launch of the fund has created an environment in which investors can buy KOSDAQ, and that is coming together with the possible introduction of the KOSDAQ promotion and relegation system and the pension fund's push to raise its KOSDAQ allocation. Money could move from KOSPI, which has recently shown signs of overheating, into KOSDAQ."
Still, some say that for KOSDAQ's long-term uptrend to continue, biotech stocks, which make up a large share of the market's top companies by capitalization, must deliver visible results.
yimsh0214@fnnews.com Lim Sang-hyeok Reporter