[Asia Economy Reporter Lee Seon-ae] The 'Charge of KOSPI,' which has raised expectations by continuously hitting record highs, and the 'Thousand-point KOSDAQ,' which has surpassed the 1000-point mark again, currently share a common point of attention: the fierce competition for the 3rd largest market capitalization in both markets. While the 1st and 2nd largest market capitalization stocks hold their positions firmly, the competition for 3rd place is unusually intense.
According to the Korea Exchange on the 18th, NAVER and Kakao have been neck and neck recently for the 3rd largest market capitalization spot on the KOSPI. On the 15th, Kakao overtook NAVER for the first time to claim 3rd place, but the very next day, on the 16th, NAVER reclaimed the 3rd spot. However, on the 17th, Kakao succeeded in regaining 3rd place after just one day. The 3rd largest market capitalization position is switching back and forth every other day.
Regarding this, Choi Yoo-jun, a researcher at Shinhan Financial Investment, explained, "The 1st and 2nd largest market capitalization spots represent companies with dominant positions in their core industries, while the 3rd place reflects future expectations rather than the present. This indicates a paradigm shift in the industry." He added, "As Korea enters the ranks of developed countries and the industrial cycle shortens, the duration of holding the 3rd largest market capitalization has shortened to about 1 to 2 years. Stocks that fall behind in the 1st and 2nd place competition or those reflecting future paradigm changes are taking the 3rd spot."
This trend accelerated from 2018, when the 4th Industrial Revolution became mainstream. After Celltrion took 3rd place, traditional industry leaders such as Hyundai Motor and LG Chem shifted their portfolios toward future industries, strengthening the positions of growth stocks like Samsung Biologics, NAVER, and Kakao.
The battle between NAVER and Kakao is expected to remain fierce. NAVER leads in sales and operating profit, but Kakao is receiving higher expectations for future potential. Ebest Investment & Securities forecasts that Kakao will nearly catch up to NAVER in sales next year, implying a possible overtaking in 2023.
Additionally, competition for sector leadership within the KOSPI market is expected to intensify. Recently, the strengthening positions of Kakao and NAVER have emphasized the untact (internet platform) sector, but competition is anticipated to become fierce with electric vehicles, which are seen as a growth weapon. Researcher Choi said, "The pandemic crisis accelerated industrial paradigm changes, and competition for stock market leadership among different growth sectors (bio, untact, electric vehicles) continues," adding, "With a favorable policy environment and the potential for expectations to materialize into performance, electric vehicles are expected to emerge as strong competitors."
The KOSDAQ market is also competitive. On the 16th, EcoPro BM rose to 3rd place in KOSDAQ market capitalization, overtaking Kakao Games and Pearl Abyss, and maintained its position on the 17th. On the 16th, Kakao Games dropped to 4th and Pearl Abyss to 5th, but their rankings switched again the next day. These three stocks have frequently exchanged the 3rd to 5th positions since June. Among them, EcoPro BM has seen the largest increase in market capitalization since June. Its market capitalization jumped from 3.8513 trillion KRW at the end of May to 4.406 trillion KRW on the 17th. Kakao Games increased from 3.902 trillion KRW to 4.1712 trillion KRW, and Pearl Abyss from 4.013 trillion KRW to 4.2315 trillion KRW during the same period.
The differences in market capitalization among these stocks are small, so rankings are likely to continue changing. This also implies fierce competition for leadership between the electric vehicle sector (EcoPro BM) and the gaming sector (Pearl Abyss and Kakao Games) in the KOSDAQ market.
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