Global Stock Market Starts 1% Down Amid Renewed COVID-19 Concerns
KOSDAQ Reverses to Rise... Jumps Above 810 to Close Higher
More Sensitive to Major Shareholder Requirements Than External Uncertainties
Market Reacts as Possibility of Grace Period Gains Traction
[Asia Economy Reporter Oh Ju-yeon] On the 29th, the KOSDAQ market stirred following news that the Democratic Party of Korea is gathering party consensus to postpone the government's plan to strengthen the major shareholder capital gains tax criteria. Despite the global stock markets plummeting the previous day due to a surge in COVID-19 cases in the US and Europe, the domestic stock market showed a smaller decline than expected.
Both the KOSPI and KOSDAQ markets started down more than 1%, but the losses decreased as time passed. In particular, the KOSDAQ market reversed to an upward trend, rising above the 810 level on expectations that the 300 million KRW major shareholder threshold might be postponed, showing a more sensitive reaction to the major shareholder issue than to external uncertainties.
In the afternoon of the 29th, 11 out of the top 15 KOSDAQ stocks by market capitalization rose. KOSDAQ stocks have a high proportion of individual investors and have recently shown weakness due to the 300 million KRW major shareholder issue.
The top market cap stock, Celltrion Healthcare, opened at 84,000 KRW, down 1.52% from the previous trading day, but closed up 4.57% at 89,200 KRW.
Among the top 15 stocks, except for four?Seegene, HL Biopharma, Alteogen, and Celltrion Pharm?stocks such as Genexine, Pearl Abyss, Hugel, EcoPro BM, SK Materials, and MedPacto all closed higher.
Although there was weakness in the early session due to external uncertainties, the impact of the strengthened 300 million KRW major shareholder criteria issue appears to have been significant for individual investors.
On this day, both the KOSPI and KOSDAQ indices started down by 1.8% and 1.9%, respectively. France and Germany announced economic lockdowns due to uncontrollable COVID-19 spread, and in the US, the daily average number of confirmed cases exceeded 70,000, increasing by about 20% compared to the previous week, expanding fear sentiment. This led to a 2-4% sharp drop in US and European stock markets the previous day.
However, the previous day, Lee Nak-yeon, leader of the Democratic Party of Korea, mentioned regarding lowering the major shareholder threshold for stock capital gains tax from the current 1 billion KRW to 300 million KRW starting next year, saying, "We will hear the results within a few days," and "The direction will be such that you don't have to worry too much." Reports that the party is leaning toward postponement led to a reversal to gains, especially in KOSDAQ stocks with a high proportion of individual investors.
On the previous day, at the launch ceremony of the 40s and 50s Special Committee held at the Democratic Party headquarters in Yeouido, Seoul, Lee said regarding the '300 million KRW major shareholder' issue, "We will reach a conclusion as soon as possible to give you even a small hope."
Meanwhile, the securities industry anticipates that if the major shareholder criteria are strengthened and changed, there may be a temporary sell-off at the end of the year, increasing volatility.
Individual investors' opposition is strong. On the 5th, a post titled "Strongly Requesting the Dismissal of Hong Nam-ki, Minister of Strategy and Finance" was uploaded on the Blue House's public petition board. The author lamented, "The stock market is maintaining an upward trend due to the participation of Donghak Ants (individual investors), but the Minister of Strategy and Finance insists on the unreasonable 300 million KRW major shareholder regulation." This petition has garnered over 210,000 supporters.
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