▲ Financial Services Commission Chairman Lee Bok-hyun and other attendees participate in a commemorative ceremony at the KOSDAQ 30th Anniversary event held at the Conrad Hotel in Yeouido, Seoul, on July 1.
As the KOSDAQ market marks its 30th anniversary today (July 1), new delisting criteria for "penny stocks"—shares trading below 1,000 won—have officially taken effect in the domestic stock market.
This move is expected to have a significant impact on the KOSDAQ market, which has a high proportion of such low-priced stocks.
Furthermore, companies with low Price-to-Book Ratios (PBR) will be publicly disclosed starting as early as October, a measure expected to further boost the KOSDAQ Value-up program.
According to the Korea Exchange (KRX), an amendment to the listing regulations, which mandates the delisting of stocks that remain below 1,000 won for a certain period, went into effect today.
Under the new procedures, a stock will be designated as an administrative issue if its price remains below 1,000 won for 30 consecutive trading days.
Subsequently, if the stock fails to maintain a price of 1,000 won or higher for 45 out of 90 consecutive trading days, it will be deemed to have met the criteria for "insufficient share price" and may be delisted.
It is expected that the first stocks to undergo delisting procedures under these new rules will emerge as early as the fourth quarter of this year.
The Korea Exchange will monitor whether stocks meet the criteria for insufficient share price and will provide guidance and take necessary actions, such as designating them as administrative issues or initiating delisting procedures, through public announcements.
As of this morning, there are a total of 221 listed companies that qualify as penny stocks.
This includes 148 companies on the KOSDAQ, 43 on the KOSPI, and 30 on the KONEX.
The KOSDAQ accounts for the largest share, at 8 percent.
In addition to the exit of these penny stocks, listing maintenance requirements are expected to be further strengthened in conjunction with market capitalization standards.
Starting today, the market cap requirement has been raised to 30 billion won for KOSPI-listed companies and 20 billion won for KOSDAQ-listed companies.
Even if companies attempt to bypass the penny stock criteria through stock consolidation or mergers and acquisitions, it will be difficult to avoid delisting unless they achieve fundamental improvements to attract more investment and exceed the market cap threshold.
Currently, 61 penny stocks on the KOSDAQ fail to meet the new market cap requirements.
Starting July 2, the so-called "Naming and Shaming" policy, which involves disclosing companies with low PBRs, will also begin in earnest.
Under this system, companies whose PBR falls within the bottom 20 percent of their industry for two consecutive periodic reports—excluding quarterly reports—will be made public.
The intention behind this public disclosure is to encourage undervalued companies to voluntarily make efforts to enhance their corporate value.
The Corporate Value-up Support Department at the Korea Exchange plans to announce detailed methods for calculating and publishing the bottom 20 percent by industry soon, with the first list of low-PBR companies expected to be released around October based on last year's annual reports and this year's semi-annual reports.
Based on calculations as of today, the average PBR of the bottom 20 percent of KOSDAQ-listed companies is 0.33 times.
Companies that have disclosed plans to enhance corporate value may be granted a temporary exemption from such disclosures and the "low-PBR stock" label.
However, in the long term, it will be difficult for companies to escape this stigma unless they raise their PBR through measures such as strengthening shareholder returns, improving profitability, or enhancing capital efficiency.
(Photo: Yonhap News)
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