🚨 KOSDAQ Breaks Through 900
Today Korean Economic News for Beginners | 2025.11.29
0️⃣ Rebound Signal with 1 Trillion Won Net Buying by Foreign and Institutional Investors
📌 900 Level Recovered in 9 Days with Government Activation Policy Expectations… Bio, Secondary Battery Strong
💬 The KOSDAQ index showed a strong rebound signal by recovering the 900 level for the first time in 9 trading days. On the 29th, the KOSDAQ index closed at 912.67, up 33.61 points (3.71%) from the previous trading day, recording the second-highest gain of the year. As news spread that the government is pursuing plans to increase the National Pension Service's investment ratio in KOSDAQ, foreign and institutional investors net bought 470 billion won and 600 billion won respectively, driving the index higher. Bio, secondary battery, and semiconductor sectors showed strength, with Peptron surging over 10% on news of Eli Lilly's production facility in Korea. Meanwhile, the KOSPI market showed weakness centered on large-cap stocks, with a clear 'money move' phenomenon as foreign funds shifted to KOSDAQ. Experts advise monitoring actual announcement details and global interest rate directions alongside policy expectations.
1️⃣ Easy Understanding
The KOSDAQ market, which has been struggling, showed some energy today. News came out that the government plans to have large funds like the National Pension Service invest more in KOSDAQ, so foreign and institutional investors bought KOSDAQ stocks with over 1 trillion won.
Let me explain what KOSDAQ is. The stock market is mainly divided into KOSPI and KOSDAQ. KOSPI is where large companies like Samsung Electronics and Hyundai Motor trade, while KOSDAQ is where small and medium-sized companies, venture companies, and technology companies in bio and IT trade. Simply put, KOSPI is like a 'stable large supermarket,' and KOSDAQ is like a market where 'neighborhood stores with high growth potential' gather.
Recently, the KOSDAQ market has been going downhill. It fell below 900, making investors feel heavy. But today it suddenly rose 3.71%. Why did this happen?
The biggest reason is policy expectations. News came out that the government is considering a plan to increase the National Pension Service's investment ratio in KOSDAQ. The National Pension Service manages huge amounts of money. The National Pension Service alone manages assets worth over 1,000 trillion won. What happens if such a big player invests more in KOSDAQ? Of course, stock prices will rise.
Let me give you an example. There's a small cafe in the neighborhood that didn't have many customers and wasn't doing well. But suddenly, rumors spread that a famous food blogger said "I plan to promote this cafe soon." They haven't actually promoted it yet, but people start visiting in advance, thinking "Oh, many customers will come soon." The KOSDAQ market is in a similar situation. Even though the government hasn't made an actual announcement, investors started buying in advance based on the expectation that 'large funds will come in soon.'
Looking at how much foreigners and institutions bought that day is surprising. Foreigners net bought 470 billion won, and institutions bought 600 billion won. Net buying means buying more than selling. The two groups poured over 1 trillion won into KOSDAQ.
On the other hand, individual investors sold. Individuals sold 1.1 trillion won worth. Why did individuals sell? There are various reasons, but many people thought "Let's sell now and take profits" as prices rose, or judged "This is just a short-term rise anyway."
Which sectors rose especially? Bio, secondary battery, and semiconductor sectors showed strength.
In bio, a company called Peptron surged over 10%. The reason is news that American pharmaceutical company Eli Lilly decided to establish a production facility for the obesity treatment drug 'Mounjaro' in Korea. Peptron makes a key ingredient for this drug. A large pharmaceutical company building a factory in Korea is huge good news for related companies. Orders will increase and sales will grow.
In secondary batteries, companies like Enchem and Ecopro rose. Secondary batteries are essential components for making electric car batteries. This sector is getting attention because the global electric car market continues to grow.
Small and mid-cap semiconductor stocks also showed an upward trend. However, large semiconductor companies in the KOSPI market, like Samsung Electronics, actually fell. This is interesting. It means foreign investors took money out of KOSPI and moved it to KOSDAQ. This phenomenon is called 'money move.' Money moves from one place to another.
Why did foreigners sell KOSPI and buy KOSDAQ? There are various reasons, but the biggest is 'growth potential.' Large-cap stocks in KOSPI have already grown enough and are stable, but it's hard to expect bigger growth. On the other hand, small and mid-cap tech stocks in KOSDAQ still have much room to grow. Especially since the government says it will support them, they seem to have judged "Now is the opportunity."
However, not all investors are optimistic. Some experts warn "This rise may just be a short-term rally." A rally means stock prices surging in a short period. In the past, KOSDAQ surged on policy expectations but fell again after being disappointed by actual policy announcements.
For example, in 2020, when the government announced KOSDAQ support measures, it rose briefly but fell again when the actual effect was minimal. So investors are now watching with a "Is this real?" attitude.
Another important factor is interest rates. If the US central bank (Fed) cuts interest rates, money flows to risky assets worldwide - investments with high growth potential but also high risk. Small and mid-cap stocks like KOSDAQ are exactly such risky assets. Conversely, if interest rates rise or stay high, money moves to safe assets.
Currently, the US is considering rate cuts but can't decide easily because of inflation (rising prices). If rates go down, more money is likely to flow into KOSDAQ. But if rates stay high or even rise, today's upward trend may not last long.
In the end, today's KOSDAQ market surge resulted from 'policy expectations' meeting 'foreign and institutional fund inflows.' However, whether this is the start of a long-term upward trend or just a short-term rebound depends on watching the government's actual policy announcements and global interest rate directions going forward.
2️⃣ Economic Terms
📕 KOSDAQ
KOSDAQ is a stock market centered on small and medium-sized enterprises and venture companies.
- It has a higher proportion of tech stocks with high growth potential, though smaller in company size than KOSPI.
- Companies in future industries like bio, IT, and secondary batteries are mainly listed.
- It's called a 'high-risk, high-return' market because the risk is high but you can expect big profits if successful.
📕 Net Buying
Net buying means buying more than selling.
- Net buying by foreigners or institutions is interpreted as a signal that large funds are entering the market.
- More net buying creates upward pressure on stock prices, while more net selling creates downward pressure.
- On this day, foreigners and institutions together net bought over 1 trillion won, pulling up the KOSDAQ index.
📕 Money Move
Money move is a phenomenon where investment funds move from one market or asset to another.
- A typical example is foreigners selling KOSPI and buying KOSDAQ.
- Fund movements change market structure and create strength and weakness by sector.
- On this day, foreigners showed a clear money move by moving money from KOSPI to KOSDAQ.
📕 Stimulus Package
A stimulus package is a policy implemented by the government to activate the market when the economy is sluggish.
- Various methods include fund injection, tax benefits, and deregulation.
- This KOSDAQ activation plan's core is increasing fund inflows through expanding the National Pension Service's investment ratio.
- Even just expectations of stimulus packages often improve investment sentiment and raise stock prices.
3️⃣ Principles and Economic Outlook
✅ How Policy Expectations Change Investment Sentiment
Markets move on expectations alone before policy announcements because investors respond proactively.
First, investors try to reflect information in advance. When news comes out that the government is pursuing KOSDAQ support policies, investors expect "Stock prices will rise when the policy is actually implemented." So they try to buy stocks before the policy is announced. When these actions gather, stock prices actually rise. This is called a 'self-fulfilling prophecy.' If many people believe "It will rise" and buy, it actually rises.
Second, policy credibility matters. If the government kept promises well in the past, investors believe and invest this time too. Conversely, if there's a history of just talking without execution, expectations weaken. The Korean government has announced stock market activation measures several times in the past, but actual effects were often limited. So some investors are cautious this time too, wondering "Will the pension fund ratio really increase?"
Third, expectations are a double-edged sword. High expectations can lead to big disappointment at actual announcements. For example, if investors expected "Pension fund investment ratio will increase from 20% to 30%," but it only increases to 25%? Objectively it's good news, but stock prices might fall because it fell short of expectations. This phenomenon is called 'buying the rumor, selling the news.' Good news comes out but prices don't rise anymore or even fall because it's already reflected in stock prices.
Policy expectations are a powerful force moving markets in the short term, but in the long term, actual policy content and effects matter more.
✅ Fund Movement and Market Structure Changes
When foreign and institutional funds move from KOSPI to KOSDAQ, the balance of the entire market changes.
First, the relative attractiveness of large-caps and small-caps changes. In recent years, KOSPI large-caps, especially semiconductor stocks like Samsung Electronics and SK Hynix, have been strong. Foreigners also invested heavily in these safe large-caps. But now, judging "Large-caps have risen enough and have no more room for big gains," they're turning to small and mid-caps. Especially future industries like AI, bio, and secondary batteries look attractive because of their high growth potential.
Second, fund movements cause chain reactions. When foreigners start buying KOSDAQ, other investors also start following, thinking "Is there something?" This is called 'herd mentality' or 'trend following.' Conversely, when foreigners leave KOSPI, individual investors also get anxious and may sell together. Eventually, small fund movements expand into big trends.
Third, market volatility increases. KOSDAQ has less trading volume than KOSPI and smaller company sizes, so the same amount of money causes bigger price fluctuations. For example, if 100 billion won flows into Samsung Electronics, the stock price might rise 1-2%, but if the same money flows into a KOSDAQ company with a market cap of 500 billion won, the stock price can rise over 10%. That's why KOSDAQ rises big when it goes up but also falls big when it goes down.
Fund movement is a natural market phenomenon, but understanding its direction and size can help catch investment opportunities.
✅ How Interest Rates Affect Small and Mid-Cap Stocks
Interest rate direction is a key variable determining the fate of small and mid-cap markets like KOSDAQ.
First, when rates fall, preference for risky assets increases. When rates are low, returns from bank deposits and bonds become low. For example, if bank deposit rates fall from 5% to 2%, people thinking "Money won't grow much in deposits" flock to risky assets like stocks. Especially small and mid-cap stocks with high growth potential become popular. Most KOSDAQ companies have small current profits but high future growth potential, so they look more attractive when rates are low.
Second, rate cuts lower companies' funding costs. Most KOSDAQ companies lack funds and borrow a lot. When rates are high, interest burden is heavy making business difficult, but when rates fall, interest burden decreases allowing more investment. For example, suppose a bio company borrowed 10 billion won for drug development. At 5% interest, they must pay 500 million won annually, but if rates fall to 2%, they only pay 200 million won. They can do additional research with the 300 million won saved.
Third, global interest rate trends also affect the domestic market. When the US Fed cuts rates, money is released worldwide. Some of this money flows into emerging market stock markets. Korea is often classified as an emerging market, so US rate cuts are positive for the Korean stock market, especially KOSDAQ. But conversely, when the US raises rates, money flows back to the US, hitting emerging market stock markets.
When considering KOSDAQ investment, you must watch not only domestic policies but also the US Fed's interest rate policy.
4️⃣ In Conclusion
Today's 3.71% surge in the KOSDAQ market resulted from government activation policy expectations meeting over 1 trillion won of net buying by foreigners and institutions.
However, whether this is the start of a 'Chun-SDAQ (KOSDAQ index breaking 1000)' era or just a short-term rebound is still unknown. In the past, KOSDAQ often surged on policy expectations but fell again after being disappointed by actual announcements.
Investors should watch three things. First, the actual government policy announcement content. How much the pension fund investment ratio will increase and when implementation starts matters. Second, global interest rate direction. If the US Fed cuts rates, more funds may flow into KOSDAQ, but if rates stay high or even rise, the upward trend may break. Third, sectoral earnings trends. Major sectors like bio, secondary batteries, and semiconductors must actually post good earnings for stock price rises to continue.
Individual investors should be careful about several things. First, don't invest rashly swept up in short-term surges. KOSDAQ has high volatility, so it rises big when it goes up but also falls big when it goes down. Second, diversification is important. Don't put all your eggs in one basket - investing across various sectors and stocks reduces risk. Third, maintain a long-term perspective. Rather than obsessing over short-term profits, it's wise to find companies with actual growth potential and invest long-term.
Companies should also use this opportunity well. During periods of increased government support and fund inflows, they should invest in technology development and business expansion to achieve real growth. Only then can they meet investors' expectations and maintain stock prices long-term.
The government must also execute, not just talk. There's a history of announcing stock market activation measures several times in the past but lacking effectiveness. This time, they must quickly present specific and executable policies to gain market trust.
In the end, today's surge could be the start of a new opportunity or end as a short-term happening. What's important is not hasty optimism or pessimism, but calmly watching the situation, keeping your investment principles, and making wise judgments from a long-term perspective.
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