Korean chip large-caps take the lead back, and the KOSDAQ's August looks borrowed

The Korea Exchange said on the 16th that the KOSPI closed at 6,977.94 on the 14th, up 2.42% in a session, while the KOSDAQ finished the same day at 864.65, up 0.38% ^[1][2]. That one-day spread is the visible end of a fortnight in which leadership in Korean equities moved back to large-cap semiconductors, which suggests the KOSDAQ's record August was a plumbing event rather than a rotation with staying power.

The weekly numbers are stark. In the first week of the month, the 3rd to the 7th, the KOSDAQ rose 10.98% and ranked first for returns among major global indexes while the KOSPI fell 5.10% ^[3][4]. In the second week, the 10th to the 14th, the KOSPI gained 11.49% and took the top spot among major global indexes, with the KOSDAQ up 8.24% and second ^[5][6]. Month to date the KOSDAQ still leads at 20.13% against the KOSPI's 5.80%, a gap of 14.33 percentage points ^[7][8][9]. Compounding those two weeks accounts for essentially all of each index's monthly return, so what looks like a month of small-cap outperformance is two weeks of opposite-signed flow ^[10][11].

The flows say who was driving. Foreign investors net sold nearly 6 trillion won of KOSPI shares in the first week and net bought 6.5741 trillion won in the second, a swing of roughly 12.6 trillion won ^[12][13][14]. Institutions added 771.9 billion won of KOSPI shares in the second week; retail investors net sold 7.0846 trillion won ^[15][16]. On the KOSDAQ the foreign bid never showed up: net selling of more than 1 trillion won in the first week and 618.7 billion won in the second, with institutions selling 40.3 billion won and retail absorbing the lot with 646.0 billion won of net buying ^{[17][18][19][20]}. Retail carried the KOSDAQ. Foreigners set the KOSPI.

On the cause, Samsung Electronics and SK hynix rose for four consecutive sessions from the 11th to the 14th, which Sedaily attributes to eased concerns about a slowdown in US AI infrastructure investment combined with expectations for new shareholder-return policies ^[21][22]. The KOSDAQ side of the trade has a more administrative origin: funds shifted there after deposit requirements on single-stock leveraged products were tightened late last month ^[23]. KOSDAQ trading value went from 4.4929 trillion won on the 30th of last month to 5.4357 trillion won on the 31st, the first day the rules took effect, then 7.1234 trillion won on the 10th and 7.5587 trillion won on the 14th, a rise of about 68% ^{[24][25][26][27][28]}. Turnover kept building while the index stalled, which reads less like conviction in small caps than like leverage-seeking money with nowhere else to go.

Watch three things. Whether the KOSDAQ can find the 15.7% it needs to reclaim 1,000 from 864.65 ^[29]; Kang Jin-hyuk of Shinhan Securities describes the index as consolidating in the mid-800s while it waits for additional momentum ^[30]. Second, the design of the proposed top tier tentatively called KOSDAQ Select, where industry sources say the argument is over how many names to include: stricter criteria than the existing KOSDAQ 150 would attract institutions, but too narrow a list concentrates funds in a few stocks and raises volatility ^[31][32]. Third, whether foreign buying of chips persists, because the KOSPI is only 0.32% from 7,000 and needs no new story to get there ^[33].