Exchange Considers Stability, Growth, and Market Cap as 3-Track Criteria for KOSDAQ Promotion System

The Korea Exchange is considering evaluating stability, growth, and market capitalization as entry criteria for the so-called "KOSDAQ promotion system," which groups leading companies within the KOSDAQ market separately.

According to the financial investment industry on the 23rd, the exchange is preparing measures to select companies among KOSDAQ-listed firms that meet criteria across two major axes—business performance and market evaluation—and incorporate them into an upper segment.

Business performance is further divided into criteria examining a company's "stability," such as earnings and revenue, and criteria evaluating "growth," such as the rate of increase in earnings and revenue.

Using market capitalization is being prominently discussed as the market evaluation criterion.

Ultimately, this is a "3-track" approach that evaluates stability, growth, and market evaluation separately.

The intention is to include companies generating a certain level of earnings and revenue and stocks capable of drawing investments from institutional investors through the stability track, while allowing venture and technology companies with steep earnings growth to be incorporated through the growth track even if their current profit scale is relatively small.

This is also seen as reflecting opposition from the venture industry, which has argued that applying profitability-centric criteria could exclude venture and technology companies in the growth stage from the upper segment.

Detailed criteria have reportedly not yet been finalized.

The exchange plans to determine specific inclusion criteria and the number of eligible stocks through various simulations and discussions with an external advisory group.

These criteria are being reviewed as initial entry standards, and directions to somewhat ease maintenance standards after inclusion are being discussed.

This takes into consideration the point that applying maintenance standards too strictly could lead to frequent entries and exits of companies, thereby reducing the stability of the segment.

The existing KOSDAQ Global Segment also applies more relaxed maintenance requirements than its inclusion requirements.

(Photo: Yonhap News)
※ Please note: This article was translated by AI and may contain errors.