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KONEX market shows tepid growth since launch

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Published : 2013-12-27 20:25
Updated : 2013-12-27 20:25

The new venture-focused bourse in South Korea posted a sluggish growth since its launch in July, the financial regulator said Friday, giving weight to calls to revise its strict entry rules to spur expansion.

The average daily turnover of the Korea New Exchange reached 390 million won ($369,500) between July and Dec. 26, with its trading volume coming in at 60,000 shares per day in the same period, according to the Financial Services Commission.

KONEX debuted on July 1 as part of the government‘s efforts to provide a third market for business start-ups and venture firms, where they can seek easier ways to raise funds via stock sales instead of having to borrow from banks.

The turnover took a downturn for the first two months after the launch, hitting as low as 220 million won in September before rebounding to 360 million won in October.

In December, the figure reached 520 million won as of Thursday following a slight fall in November, the FSC said.

Its market capitalization almost doubled to 915.6 billion won as of Dec. 26 from 468.9 billion won tallied in July, with a total of 45 firms currently listed on the index, up from 21 players at the time of the launch.

The overall slump in the local stock market and lack of investor confidence due to a slowing economy have been mainly blamed for KONEX’s lukewarm growth.

Given the poor performance, market experts are recommending easier entry rules for individual investors who want to make bets in KONEX-listed firms as a way of boosting the smaller bourse.

An individual investor needs to hold a minimum of 300 million won in his or her account to be eligible to take part in the venture market, which experts say is too high.

The FSC made it clear that it has no plans to change the regulations, considering the potential volatility the KONEX entails, which can incur heavy losses on the investors.

But the regulator said it will encourage local asset managers from next year to design more mutual funds that include KONEX-listed firms, so as to provide more indirect opportunities for retail investors to participate in the new bourse. (Yonhap News)

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