38 companies delisted from Kosdaq as gov't moves to revitalize market

A total of 38 companies were delisted from the Kosdaq market this year — 2.5 times more than the average of the past three years combined — as the government stepped up efforts to remove underperforming firms and revitalize the market.

A screen in Hana Bank's trading room in central Seoul shows the Kospi and Kosdaq closing on Dec. 26. [NEWS1]

A total of 38 companies were delisted from the Kosdaq market this year — 2.5 times more than the average of the past three years combined — as the government stepped up efforts to remove underperforming firms and revitalize the market that has long been labeled the “graveyard of retail investors.”

The Korea Exchange on Sunday released its annual report on initial public offerings (IPOs) and delistings on the Kosdaq market. Of the 38 companies delisted this year, 23 were removed after substantive reviews rather than for procedural reasons such as capital erosion or failure to submit reports. That number is three times the average over the previous three years.

A major factor behind the surge was the streamlining of the delisting review process. Three stages were reduced to two; consequently, the average time required to complete the delisting process in the second half of the year was 261 days — nearly half the 497 days recorded in the first half.

There were 84 new listings on the Kosdaq this year, slightly down from 88 last year. However, their combined market capitalization, based on IPO prices, reached 15.3 trillion won ($10.7 billion), the highest in four years since 2021.

“A large number of strong, small- and mid-sized enterprises entered the market this year, contributing to qualitative growth,” said a representative from the exchange.

Biotech companies led the way. Of the 11 newly listed firms whose market capitalization surpassed 1 trillion won, nine were from the biotech sector.

President Lee Jae Myung speaks during a policy briefing from the Financial Services Commission at the government complex in Jongno District, central Seoul, on Dec. 19. [NEWS1]

AimedBio, a developer of antibody-drug conjugate therapies, went public on Dec. 4 with an initial market cap of 705.7 billion won. As of Wednesday — just 20 days later — its market cap soared to over 4.6 trillion won, making it the 12th-largest company on the Kosdaq.

This kind of “high turnover” on the Kosdaq is expected to intensify even more next year.

“There's distrust in the Kosdaq — that stocks could turn into penny stocks, that manipulation is common or that underperforming companies rarely get delisted,” said President Lee Jae Myung during a policy briefing from the Financial Services Commission (FSC) on Dec. 19. He ordered the removal of poorly performing firms.

That same day, the FSC unveiled its “Kosdaq Reliability and Innovation Plan,” which includes enhancing the independence of the Kosdaq, redesigning listing and delisting criteria to foster a high turnover ecosystem, improving access for institutional investors and bolstering investor protection.

The Kospi is seen on an electronic display at the Korea Exchange's Seoul office in Yeouido, western Seoul, on Nov. 5. [KIM KYOUNG-ROK]

As part of the plan, starting from next year, the exchange will gradually tighten its delisting criteria. Currently, companies with a market cap of more than 4 billion won are spared delisting. This threshold will rise to 15 billion won in 2026, 20 billion won in 2027 and 30 billion won in 2028.

A total of 14 listed companies would fall into the risk category next year under the revised criteria, according to simulations by the exchange. By 2028, that number could increase to 165.

Baek Joon-ki, an analyst at NH Investment & Securities, forecasts the Kosdaq index will reach 1,100 next year.

“If the government’s overhaul of the listing and delisting system and its institutional investor policies gain traction, there will be greater upside potential,” Baek said.

“The comprehensive investment account system introduced in November requires a portion of raised funds to be invested in risk capital,” said Tae Yoon-sun, an analyst at KB Securities. “This is expected to drive inflows into small- and mid-cap Kosdaq stocks.”

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom. BY JANG SEO-YUN [lim.jeongwon@joongang.co.kr]