KOSDAQ Revitalization Measures Announced – Will Expanded Tax Benefits and Pension Fund Investments Usher in a ‘Thousand KOSDAQ’ Era?
Editor
According to an exclusive report by the Korea Economic Daily, some truly intriguing news has emerged. The government has finally decided to unveil a comprehensive plan to revitalize KOSDAQ. In fact, over the past six months, KOSPI has risen by 49.78%, while KOSDAQ has only increased by 20.96%, highlighting the severity of this disparity. As of November 27, 2025, KOSDAQ is indeed being treated as a ‘second-tier league’.
Personally, I find this plan quite groundbreaking. Particularly, expanding the personal investment income deduction from the current 30 million won to 50 million won is a significant change. This means the deductible amount increases from 3 million won to 5 million won, allowing an employee earning around 100 million won annually to save approximately 2 million won more in taxes. But will this really lead to an increase in KOSDAQ investments?
The current situation of KOSDAQ is indeed dire. As mentioned in the article, it has earned the stigma of being a ‘speculative playground for short-term traders’. Leading companies are moving to KOSPI, leaving behind only poorly performing listed companies manipulated by speculative forces. The fact that the number of technology-specialized listings has decreased to 35 this year from 42 last year is an indicator of this reality.
However, the new measures suggest that the government is approaching this issue quite seriously. The plan to increase the pension fund’s KOSDAQ investment ratio from the current 3% to around 5% is a case in point. Given that the National Pension Service manages assets exceeding 1,000 trillion won, even a 2 percentage point increase in investment ratio could channel an additional 20 trillion won into KOSDAQ. This scale of investment could significantly impact the market.
The Role of the 150 Trillion Won National Growth Fund
Even more interesting is the plan to utilize the 150 trillion won National Growth Fund. The government has decided to focus on investing in ten advanced strategic industries, including AI, semiconductors, and biotechnology, over the next five years. It is anticipated that a substantial portion of these funds will flow into small and medium-sized technology companies, offering a great opportunity for innovative companies listed on KOSDAQ.
In fact, considering that Korea’s venture investment market is about 6 trillion won as of 2024, even a portion of the 150 trillion won fund flowing into venture investments could change the market landscape. KOSDAQ companies in the semiconductor and AI sectors are likely to benefit directly. Since large corporations like SK Hynix and Samsung Electronics are listed on KOSPI, KOSDAQ has relatively smaller semiconductor-related companies.
However, the truly important aspect is the market restructuring plan. The financial authorities have stated their intention to transform the markets into KOSDAQ, focused on growth and mid-sized companies, and the stock market, centered on blue-chip and large corporations. If realized, this could clarify the identity of each market. Currently, apart from the size difference, there isn’t much distinction between KOSDAQ and KOSPI.
Securities Firms to Inject 20 Trillion Won in Venture Capital
Another noteworthy aspect is that securities firms plan to inject over 20 trillion won in venture capital starting next year. Korea Investment & Securities and Mirae Asset Securities have been designated as Comprehensive Investment Account (IMA) operators, and Kiwoom Securities has received a license for the issuance of promissory notes. IMA operators can raise funds up to 300% of their equity, and promissory notes can be issued up to 200%.
For instance, if Korea Investment & Securities has an equity capital of 12 trillion won, it can raise up to 36 trillion won, with at least 10% required to be invested in venture capital, increasing to 25% by 2028. A simple calculation suggests that Korea Investment & Securities alone could generate about 9 trillion won in venture capital. Combined with Mirae Asset, KB, and NH Investment & Securities, the scale could be enormous.
The backdrop of these policies seems to reflect the government’s awareness of the relative neglect of KOSDAQ amid the ‘KOSPI 5000’ pledge. While KOSPI continues to rise, KOSDAQ remains stagnant, creating difficulties in fundraising and attracting investments for small and venture companies. Considering the overall impact on the startup ecosystem, revitalizing KOSDAQ is indeed a crucial task.
However, there are also concerns. The plan to increase the priority allocation ratio of public offerings to KOSDAQ venture funds from 25% to over 30% could be disadvantageous to ordinary individual investors. The more attractive the public offering, the more it is allocated to funds, intensifying the subscription competition for the general public.
Another point to consider is the overall flow of funds in the market. Just because pension funds or institutional investors increase their investments in KOSDAQ doesn’t necessarily mean only good companies benefit. There is a risk that poorly performing companies might also be buoyed, potentially undermining the overall market’s health. Although the government plans to strengthen the delisting criteria for companies with a market capitalization of less than 150 billion won to address ‘zombie companies’, it remains to be seen how strictly this will be enforced.
Personally, I believe this plan will undoubtedly have a positive impact on the KOSDAQ market in the short term. The expansion of tax benefits and increased pension fund investments are likely to lead to direct capital inflows. However, in the long term, it is more important for truly good companies to list on KOSDAQ and for investors to approach it from a long-term investment perspective rather than short-term trading.
Ultimately, the key is whether KOSDAQ can truly transform into a ‘stage for innovative companies’. I believe that the government’s support measures should not merely be temporary stimuli but should lead to fundamental improvements in the market’s structure. With next year marking the 30th anniversary of KOSDAQ’s launch, I hope it becomes a meaningful year of change.
This article was written after reading a finance article, adding personal opinions and analysis.
Disclaimer: This blog is not a news outlet, and the content is the author’s personal opinion. The responsibility for investment decisions lies with the investor, and no liability is accepted for investment losses based on the content of this article.
