Clipart Korea
Korea’s exchange-traded fund (ETF) market has surpassed 500 trillion won in net assets and overtaken the market capitalization of the KOSDAQ for the first time. While the ETF market grew rapidly this year, the KOSDAQ’s market cap declined along with the index’s weakness, producing the first “golden cross” since ETFs were introduced in Korea.
According to the Korea Exchange (KRX) and other sources Friday, the total net assets of domestic ETFs stood at 519.7474 trillion won as of the 25th of this month, exceeding the KOSDAQ market capitalization of 499.3039 trillion won on the same day. The market cap of domestic ETFs also reached 502.4556 trillion won as of the 26th, more than 20 trillion won above the KOSDAQ’s market cap of 478.7472 trillion won on the same day.
This marks the first time domestic ETF net assets have surpassed the KOSDAQ market since ETFs were first listed on the stock market in October 2002. The first reversal occurred on the 23rd of this month. At that time, the KOSDAQ market capitalization fell sharply from 543.8033 trillion won the previous day to 500.9414 trillion won. Over the same period, ETF net assets also declined from 532.9747 trillion won to 501.3869 trillion won, but their limited drop relative to the KOSDAQ index allowed them to exceed the KOSDAQ’s market cap.
The ETF market’s growth has steepened this year. ETF net assets, which stood at 297.2703 trillion won at the end of last year, surpassed 300 trillion won in January, exceeded 400 trillion won in April, and broke through 500 trillion won in May. The number of products is also growing rapidly. As of the 26th of this month, 1,142 ETFs were listed in Korea, narrowing the gap with the 1,822 stocks listed on the KOSDAQ. About 100 ETFs were newly listed this year alone.
The KOSDAQ market, by contrast, continues to contract. After reaching a record high of 679.5452 trillion won on April 27 this year, the KOSDAQ market cap has continued to decline. At that time, the KOSDAQ market capitalization was more than 250 trillion won higher than ETF net assets of 427.4658 trillion won, but it fell below 600 trillion won for the first time on the 20th of last month and dropped below 500 trillion won on the 25th of this month.
“The recent weakness in the KOSDAQ has drawn criticism of its poor fundamentals compared with the KOSPI, but market concentration is also judged to be a major cause,” said Kim Jun-young, a researcher at iM Securities. “For the time being, the concentration toward AI semiconductor leaders, including Samsung Electronics and SK hynix, is expected to continue.”
