[Edaily Reporter Kwon Oh Seok ] A proposal has been put forward that, in order to revive the KOSDAQ market—which has become mired in a “quagmire of struggling companies” with over 1,300 firms entering the market over the past 20 years but only about 400 exiting—it is urgent to improve the market’s fundamentals through “segment separation” and establish a “high birth, high death” structure.

On the 13th, a “Capital Market Policy Roundtable” chaired by President Lee Jae-myung was held at the Korea Exchange in Yeouido. Lim Hyung-jun, a research fellow at the Korea Institute of Finance, who attended the event, made these remarks in a presentation titled “The Venture Ecosystem and the Redesign of KOSDAQ.”
He stated, “While there has been active market entry into the KOSDAQ market, delisting has not proceeded smoothly. Consequently, the number of vulnerable companies within the market has increased, and the risk of unfair trading has expanded.”
According to data presented by Research Fellow Im, 1,353 companies have entered the KOSDAQ market over the past 20 years, but only 415 have been delisted. Small-cap stocks—those with a market capitalization of less than 30 billion won—number 392. Research Fellow Lim pointed out, “This has eroded market confidence, stifling institutional and long-term investment and shaping the market around short-term retail trading,” adding, “Consequently, valuations are occurring at levels lower than what the market expects and hopes for.”
Lurking beneath these structural distortions are two key factors: “early listings” and “delayed delistings.” As domestic venture capital (VC) firms rely heavily on initial public offerings (IPOs)—which account for 37.3% of their total exit strategy—pressure for early listings to recoup investment capital has intensified.
Compounding this issue, the delayed delisting of insolvent and vulnerable companies has led institutional investors to turn away from the market. Between 2023 and 2025, there were 586 stocks on the KOSDAQ market where the average daily trading volume fell below 100 million won on more than 20% of trading days.
He first identified two key goals for the KOSDAQ market: △ supporting the growth of high-quality, high-growth companies and △ enhancing valuations by improving market order and liquidity. He then proposed “creating a dynamic environment of frequent listings and delistings” as a solution to achieve both of these goals simultaneously.
Research Fellow Lim argued, “Mergers and acquisitions (M&A) and secondary market transactions need to be revitalized prior to the IPO stage to diversify exit strategies.”
Another key task he proposed was segment separation to restructure the market. The aim is to clearly divide the market into groups of high-quality, high-growth companies and lower-tier companies, thereby providing incentives for companies to enhance their own value.
Research Fellow Lim emphasized, “The key lies in how we provide both sticks and carrots to encourage companies to enhance their corporate value,” stressing the need to use indicators that guarantee objectivity—even if they are somewhat rigid—as criteria for segment separation.
If segment separation is implemented, high-quality companies are expected to have an incentive to remain on the KOSDAQ, and liquidity and valuations are expected to improve significantly as inflows from institutional investors—such as pension funds—and index-tracking funds (passive funds) increase. On the other hand, he noted that detailed follow-up policies must be put in place to address concerns regarding a “stigma effect” on the lower-tier segment and potential harm to companies that were performing normally during their early listing stages.
Research Fellow Lim added, “Differences may arise between the high-quality group and the less-quality group during the market segmentation process,” noting, “What is important is that continuous, timely, and reasonable post-restructuring adjustments are implemented.”