KOSPI Rally Sparks Hopes of Sector Rotation, Crackdown on Penny Stocks Begins

[Anchor]

Today, the KOSPI surged significantly, driven by steady gains across various sectors alongside semiconductors. Meanwhile, as delisting requirements have been tightened to weed out troubled companies, 36 stocks—including so-called penny stocks trading below 1,000 won—have been designated as administrative issues.

Reporter Kim Hye-min has the details.


[Reporter]

It was not just the two semiconductor giants that led the KOSPI's 3.6% surge today.

While Samsung Electronics jumped 6.6% and SK Hynix soared 5.5%, cosmetic stocks such as Kolmar Korea and Cosmax, as well as Doosan Enerbility and Samsung Electro-Mechanics, also showed strong gains.

During this year's sharp market rally, the concentration in semiconductors resulted in more declining stocks than advancing ones. However, since the beginning of this month, the number of advancing stocks has exceeded declining ones on every single day except one.

The KOSPI 200 Volatility Index also dropped back to the 50s for the first time in three months.

Experts explained that this indicates a easing of market polarization, noting signs of sector rotation where stock prices rise sequentially across different industries.

[Interview / Han Ji-young / Researcher, Kiwoom Securities: Unlike the rebounds following the sharp drops in May and June, this bounce is not just concentrated in semiconductors. The warmth of sector rotation seems to be spreading much more widely than before.]

Measures to strengthen the delisting of troubled companies in the stock market, aimed at resolving the Korea Discount, have also gone into full effect.

Thirty-six companies were designated as administrative issues, including so-called penny stocks whose share prices fall short of 1,000 won, as well as firms with a market capitalization of less than 30 billion won for the KOSPI or 20 billion won for the KOSDAQ.

These are companies whose share prices remained below 1,000 won for 30 consecutive trading days starting from July 1 or failed to meet market capitalization criteria. If they fail to meet the standards for 45 out of 90 subsequent trading days, they will become subject to final delisting.

[Interview / Kang So-hyun / Senior Research Fellow, Korea Capital Market Institute: Regulations restricting the listing of penny stocks have been implemented in the U.S. for a long time. When trading volume is low and price volatility is high, the possibility of intentionally manipulating stock prices increases.]

However, concerns are also being raised that small and medium-sized enterprises (SMEs) whose share prices plummeted regardless of their financial performance or status due to recent stock market fluctuations could suffer damages.

The Korea Federation of SMEs has requested supplementary improvements to the relevant standards and a postponement of their implementation.

(Photo: Seol Chi-hwan | Video Editing: Lee Sang-min | Design: Lee Jun-ho)
※ Please note: This article was translated by AI and may contain errors.