[Exclusive] 80% of Reports Focus on Large-Cap Stocks... 600 Small- and Mid-Cap Stock Reports to Be Released Next Year

[Asia Economy Reporter Lee Seon-ae] Next year, 600 reports on small and medium-sized enterprises (SMEs) will be provided free of charge to individual investors. Since more than 80% of stock reports have been concentrated on large-cap stocks, it is expected that the information blind spots for small-cap stocks will be resolved. The free provision of SME reports will be handled by the "SME Specialized Research Center," which is set to launch through the collaboration of four securities-related organizations committed to creating an attractive stock market environment by providing high-quality investment analysis information. The SME Specialized Research Center will be newly established as an independent organization under the Korea IR Council, a non-profit corporation established by the Korea Exchange.

According to the Korea IR Council on the 16th, the SME Specialized Research Center plans to release investment analysis reports on SMEs free of charge starting from the first half of next year. The annual plan totals 600 reports. To this end, they have recently completed hiring analysts and research assistants (RAs).

An official from the IR Council stated, "Currently, the technical analysis reports conducted by the IR Council aim to provide 300 reports next year," adding, "Additionally, with the researchers hired by the SME Specialized Research Center, we plan to produce a total of 600 reports: 200 in-house SME reports and about 100 outsourced reports targeting SME-specialized securities firms and independent research companies."

The technical analysis reports are commissioned by the Korea IR Council to technical credit rating agencies (such as Korea Enterprise Data, NICE Information Service, NICE D&B) with sponsorship from the Korea Exchange and the Korea Securities Depository. These reports aim to expand investment information on KOSDAQ companies as part of efforts to revitalize the KOSDAQ market and innovate the capital market. These reports are also freely accessible to anyone on the website.

The official added, "We are currently recruiting analysts and RAs on an ongoing basis, and once the research center is fully staffed in 2023, we plan to produce up to 300 in-house SME reports. Our goal is to produce a total of about 1,800 reports over the next three years."

The analysis targets listed companies with a market capitalization under 500 billion KRW on the KOSPI, KOSDAQ, and KONEX markets. The reports will include professional analysis information such as objective corporate data, financial status, technical analysis, and growth potential and latent value based on market consensus.

Currently, research centers at domestic securities firms mainly produce corporate analysis reports focused on large-cap stocks. According to the Korea Exchange, last year, 32 domestic securities firms issued a total of 27,682 corporate analysis reports, of which 23,254 (84.1%) were on companies with a market capitalization exceeding 500 billion KRW. Reports on mid-cap stocks with market caps between 100 billion and 500 billion KRW numbered 4,094, accounting for only 14.8%, while reports on small-cap stocks under 100 billion KRW accounted for just 1.1%.

To address this information imbalance, the Korea Exchange has joined hands with the Korea Securities Depository, Korea Securities Finance Corporation, and Korea IR Council. These four securities-related organizations agreed in September to jointly invest and prepare for the establishment of the SME Research Center as an independent organization under the IR Council through a comprehensive mutual cooperation memorandum of understanding (MOU). Son Byung-doo, Chairman of the Korea Exchange, said, "Private sector reports from securities firms are concentrated only on large companies, and SMEs continue to suffer from a vicious cycle of low liquidity due to a lack of investment information. Related organizations must actively resolve this information imbalance issue through public interest efforts." The Exchange expects that providing high-quality investment information starting next year will improve the investment environment for individual investors. By offering high-quality corporate analysis information free of charge to SMEs, which have been in an information blind spot, SMEs will find it easier to secure smooth funding and liquidity, and investors can expect to be guided toward sound and stable investments.