Booming Kosdaq Market

The stock market for start-ups now ranks second largest in the world in daily trading value

The number of listed companies on Kosdaq of the Korea Exchange for the first time exceeded 1,000, making the stock market the fourth largest in the world in terms of the listed number of companies and the second largest in daily trade values in the world following the Nasdaq in the New York Stock Exchange, KRX said Oct. 1.
Such fast growth of the Kosdaq market has earned itself a praise as a breeder of the start-up companies in Korea and as having played the role of a locomotive in the growth of the Korean economy.
KRX said the listing of four venture companies including IES Technologies, Neotis and Sangbo put the number of listed firms over the 1,000 mark, 1,001 to be exact on Oct. 1.
It has been pointed out that excessively frequent changes in prices, speculative investment and others have been singled out as the shortcomings of the market that should be corrected for the sounder growth of the market, stock analysts said.It has taken 20 years and 6 months for the Kosdaq market to be where it is since its opening as an outside trading market and 11 years and 3 months since its launching as Kosdaq market.
Since its opening, an average of 92 firms listed their shares on the market totaling some 1,010, but 352 companies were dropped from the list during the span, a daily average of 32 firms mostly due to bankruptcy.
The Kosdaq market had its start as an outside trading market operated by the Korea Securities Dealers Association in 1987 and it became a regular stock exchange with the introduction of an auction-type stock dealing system in 1996.
When it opened as an outside trading market, three companies listed first including Aero System and in 1992, the number of listed firms expanded to over 100. When it became a regular stock exchange in 1996, the listed firms totaled 343. The market grew faster thanks to the start of the bubble period in small IT start-ups and by August, 2000, the number of listed firms came to over 500.
When the market merged with the Korea Exchange in January of 2005, the number of listed companies totaled 892. The market value of Kosdaq amounted to over 100 trillion won, expanding 12 times from the time when the market became a regular stock exchange with a daily average trading volume valued at 2.600 trillion won with a daily average shares traded amounting to 650 million shares.
The Korea Exchange (KRX) said it signed a memorandum of understanding Sept. 19 to help Laos establish its first stock exchange by 2010.
Laos will have its bourse, if set up, run by central bank. Laos said it chose the KRX as a partner because it showed much enthusiasm and seriousness in cooperating with the Southeast Asian nation in creating such an exchange market from scratch.
"The other factor in selecting KRX for us is that it has many experiences and practices,"said the Bank of Laos Governor Phouphet Khamphounvong in a press conference held at the exchange headquarters in Seoul after the MOU signing ceremony.
Under the agreement, the KRX will help set up Laos'main bourse as a joint venture with the Southeast Asian country, and provide training and consultations on global stock trading and digital networking system.
Laos, in return, will encourage its state-run enterprises to go public on the Korean stock market ahead of the establishment of the Lao bourse.
The Laos'central bank governor said that the exchange will help prepare the groundwork for its companies to list on the stock market here.
"The project with Laos will test the exchange" globalization and help spur the market in becoming a financial hub,"said CEO Lee Young-tak of the KRX.
The two sides engaged in talks of building a Laos stock market since April this year.
Its central bank governor said that the nation finds it necessary to build a stock market for financial sustainability and the improvement of its investment and trade environment.
Besides Laos, the exchange has so far agreed to back Vietnam and Cambodia in developing stock markets there as part of its globalization projects. nw

President Lee Young-tak of Korea Exchange.

KRX President Lee shakes hands with Bank of Laos Gov. Phouphet Khamphoungvong after signing an MOU on Sept. 19 in Seoul.