KOSDAQ is a securities market focused on small and venture businesses, established based on Korea’s over-the-counter stock market system. The acronym stands for ‘Korea Securities Dealers Automated Quotations.’ It was launched in July 1996, modeled after the U.S. NASDAQ.
Unlike KOSPI, KOSDAQ primarily lists growth-oriented companies with relatively small market capitalizations based on technological capabilities. The market is dominated by sectors such as biotech, IT, content, software, and semiconductor equipment. It is utilized as a funding channel for companies completing initial growth to further expand their business.
The KOSDAQ index started from a base of 100 in 1996. Although its calculation method is similar to that of KOSPI, its index components’ characteristics lead to higher volatility. This volatility, which can result in significant index fluctuations over minor issues, presents opportunities for investors pursuing high-risk, high-return strategies.
Created with the aim to nurture venture businesses and boost the technology industry, KOSDAQ provides a relatively low threshold for capital-weak companies to go public. There are various institutional supports like technology-based listings and growth-based listings available. Notably, companies can get listed without profit if they pass certain criteria through a technology evaluation.
For example, companies like Celltrion Healthcare, Kakao Games, and Alteogen are prominent firms that have grown through the KOSDAQ market. They have subsequently demonstrated their potential by transferring to KOSPI or attracting global investment.
KOSDAQ has evolved with investor protection measures and corporate growth support policies. To enhance market credibility, the Korea Exchange has reformed listing requirements and strengthened disclosure obligations. KOSDAQ-listed companies also build market trust through continued R&D and enhancing business transparency.
As KOSDAQ is sensitive to macroeconomic variables such as domestic and international economic conditions, interest rates, and exchange rates, its index is directly linked to the business sentiment of small and medium enterprises. Investors can gauge the trends of tech stocks and venture companies, reflecting expectations for future industries.
KOSDAQ is a market where technology-oriented companies that will lead Korea’s economic future are gathered. This market, which contains both growth potential and risk, offers new opportunities for investors and serves as a stage for companies to take on challenges. This is why KOSDAQ is establishing itself as an independent innovation platform, rather than just a ‘secondary market.’