Kosdaq Market Rises on Policy Hopes — Why Investors Should Stay Cautious

 1. Short-Term Sentiment Improves on Policy Expectations

The Kosdaq market has recently shown a noticeable boost in short-term sentiment, driven largely by expectations rather than concrete policy announcements. Reports in the local media suggested that the government may be preparing new measures to stimulate activity in the Kosdaq market. Although the Financial Services Commission quickly clarified that “nothing has been confirmed,” trading volume still surged as investor optimism took hold.

According to Ki-Hoon Park, an analyst at Korea Investment & Securities, this pattern shows just how sensitive the market is to the idea of policy support. Even without official confirmation, anticipation alone was enough to create meaningful improvements in liquidity.

2. Past Attempts Show a Pattern of Short-Lived Rallies

While the current optimism is understandable, Park urges investors to look at the bigger picture. Over the past 20 years, Korea has launched three major initiatives aimed at revitalizing the Kosdaq market. Each time, the outcome followed a familiar pattern: a brief period of rapid price gains followed by long stretches of underperformance.

This historical trend suggests that policy-driven momentum can easily fade if not supported by structural change. Park notes that excitement alone cannot sustain a long-term upward trend, especially in a market that heavily relies on institutional participation.

3. Key Variables That Could Determine Real Change

To avoid repeating past missteps, Park recommends focusing on the specific policy elements that could create lasting impact. Among the ideas being discussed, he highlights two factors that deserve close attention:

• Expansion of Tax Benefits

One proposal is to raise the tax-deductible limit for Kosdaq venture funds from 30 million KRW to 50 million KRW. If implemented, this could incentivize more retail and high-income investors to allocate capital to growth-focused companies.

• Injection of Capital From Large Investment Banks

Another critical variable is whether large investment banks will be required—or strongly encouraged—to commit venture capital to the Kosdaq ecosystem. This kind of institutional participation can support more stable and consistent market growth.

These measures, if enacted, could address the long-standing issue of insufficient long-term funds flowing into Kosdaq-listed companies.

4. Why Pension Fund Participation Is Still Uncertain

Some investors hope that public institutions, including national pension funds, will increase their allocation to the Kosdaq market. However, Park warns against assuming this will happen automatically. Without clear changes to investment guidelines or formal mandates, pension fund announcements may remain symbolic rather than substantive.

In previous cases, the absence of enforceable rules resulted in little more than temporary enthusiasm. Park stresses that this variable should be viewed with caution.

5. What Investors Should Focus on Moving Forward

For individual investors, the most important step is distinguishing between news headlines and real regulatory change. Short-term momentum can certainly create trading opportunities, but long-term performance depends on concrete policy implementation.

Park advises investors to monitor whether discussions about tax incentives, fund rules, or institutional requirements evolve into formal changes. These details will guide how aggressively—or conservatively—one should approach Kosdaq-related investments in the months ahead.

6. Balanced Judgment Over Pure Optimism

The Kosdaq market may continue to attract attention as talk of revitalization policies grows. Yet the mixture of opportunity and uncertainty means that balanced judgment is essential. As history shows, expectations can spark quick rallies, but only structural improvements can sustain long-term growth.

For now, staying informed and watching for actual regulatory updates may be the most reliable investment strategy.