KOSPI small-cap stocks are experiencing a severe liquidity crisis surpassing KOSDAQ market conditions, according to Korea Exchange (KRX) data. The KRX KOSPI Small Cap Index closed at 2291.06 on the 23rd, up 3.94% but down approximately 25% from its April 29 peak of 3058.39 and about 10% below year-start levels of 2560.56, while the broader KOSPI index rose over 60% in the same period. Trading volume fell to 844.9 billion won on the 20th and remained below 1 trillion won for three consecutive days through the 22nd, down from over 4 trillion won in February. The liquidity drought stems from capital concentration in large-cap stocks and single-stock leverage ETFs, disrupting traditional market rotation. Financial industry observers note government policy support has focused on KOSDAQ, leaving KOSPI small and mid-cap stocks in a regulatory blind spot despite similar liquidity challenges.
KOSPI Small-Cap Trading Volume Drops Below 1 Trillion Won
KOSPI small-cap trading volume broke below the 1 trillion won threshold on the 20th, reaching 844.9 billion won, and remained under 1 trillion won for three consecutive trading days through the 22nd. This represents a decline to approximately one-quarter of the over 4 trillion won in daily trading volume recorded in February. In contrast, the KRX KOSDAQ Small Cap Index, which includes companies with market capitalizations below approximately 500 billion won, has not recorded trading volume below 1 trillion won once in the past year.
KOSPI mid-cap stocks face similar conditions. The KRX KOSPI Mid Cap Index, covering companies with market capitalizations below approximately 6 trillion won, has recently traded between 1 trillion and 2 trillion won. On the 23rd, mid-cap trading volume reached approximately 3.6 trillion won, exceeding 3 trillion won for the first time this month as KOSPI rose over 4%, but this remains below the over 7 trillion won in daily trading recorded in April.
Industry Calls for Market Cap-Based Liquidity Policies
Securities industry representatives stated that government capital market policies this year have emphasized growth company support and concentrated on KOSDAQ, while KOSPI small and mid-cap stocks experience similar supply shortages due to capital concentration in KOSPI large-cap stocks. An industry official stated that liquidity support measures should consider market capitalization and company characteristics rather than distinguishing between KOSDAQ and KOSPI markets. Capital market observers expressed concerns that neglecting these blind spots could weaken the overall market's capital intermediation function.
FAQ
What is the current performance of KOSPI small-cap stocks compared to the broader market?
The KRX KOSPI Small Cap Index closed at 2291.06 on the 23rd, approximately 25% below its 52-week high of 3058.39 recorded on April 29 and about 10% below year-start levels of 2560.56. During the same period, the broader KOSPI index rose over 60%, indicating significant underperformance by small-cap stocks.
How has KOSPI small-cap trading volume changed recently?
KOSPI small-cap trading volume fell to 844.9 billion won on the 20th and remained below 1 trillion won for three consecutive days through the 22nd. This represents a decline to approximately one-quarter of the over 4 trillion won in daily trading volume recorded in February.
What policy changes are industry representatives requesting?
Securities industry representatives are calling for liquidity support measures that consider market capitalization and company characteristics rather than distinguishing between KOSDAQ and KOSPI markets, noting that KOSPI small and mid-cap stocks face similar liquidity challenges despite government policy support focusing primarily on KOSDAQ.
