The South Korean government announced Thursday a package of new measures including tax breaks and launch of new index products to further foster the growth of the nation’s secondary Kosdaq market that has been always trailing behind its bigger sibling Kospi bourse.
Retail investors who invest in Kosdaq venture funds will be granted a tax break up to 3 million won ($2,798), and local pension funds will also be exempted from the current 0.3 percent tax on stock transaction when they sell shares listed on the Kosdaq during arbitrage trading, according to the new measures introduced by the Financial Services Commission.
As hinted earlier this week, the government will launch a new index combining shares listed on the country’s main Kospi and junior Kosdaq next month. The new index dubbed KRX300 will be composed of 232 Kospi-listed firms accounting for 92.9 percent of total market cap of the Kospi and 68 Kosdaq-listed firms taking up 41.7 percent of the market, according to the government. Seoul is also aiming to roll out another new index with a collection of selectively picked small- and mid-cap shares of promising small- and medium-sized enterprises (SME) from the Kospi and Kosdaq by June.
A slew of measures to further boost the country’s secondary bourse that mainly attracts investors for bio and tech companies come two days after Financial Services Commission (FSC) Chairman Choi Jong-ku Tuesday unveiled plans to ease the entry of companies to the Kosdaq and form a fund jointly invested by state entities to draw more institutional investors’ interest in the market.
Under the newly announced measures, Korea Exchange (KRX) and Korea Securities Depository (KSD) will set up a 300 billion won joint fund to invest into undervalued companies listed on the technology and bio-laden secondary bourse.
To make it easier for smaller companies to join the junior market, the government will remove bottom line and paid-equity requirements that get in the way of public offerings of venture enterprises. In addition, a new exchange-traded fund (ETF) tracking information technology (IT) index in Korea and Taiwan will be listed on overseas markets in December.
Kim Dong-yeon, the nation’s deputy minister and finance minister, said that the government will strengthen support for the Kosdaq market to help it play a role in promoting startups as a sound and trustworthy market.
Kosdaq ended last year 26.4 percent higher from the previous year on expectations for the government’s increasing support to promote the secondary market. The bourse has continued its rally this year and ended Thursday up 2.11 percent at 852.51, the highest in nearly 16 years. The previous high was 858.80 recorded in April 19, 2002. The country’s main index Kospi closed down 0.5 percent lower at 2,487.91 on the same day.
By Cho Si-young and Choi Mira
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]