National Growth Fund Sells Out and KOSDAQ Surges: A Signal for Korean Stock Market Revitalization?
On May 22, 2026, the National Growth Fund's sell-out and a 4.99% surge in the KOSDAQ index are injecting new vitality into the Korean stock market. Government policies to boost KOSDAQ and investment expectations in advanced industries have fueled buying, particularly in growth stocks like pharmaceuticals and biotech, which helped defend the KOSPI despite foreign selling. Attention is now on whether government policies and the potential of growth industries can drive sustainable growth in the Korean stock market.
National Growth Fund Sells Out, Injecting Vitality into KOSDAQ Market
On May 22, 2026, the South Korean stock market witnessed a notable development. The National Growth Fund, launched as part of the government's initiative to revitalize the KOSDAQ market, saw its public participation version sell out on its first day of sales, injecting significant momentum into the market. Online sales at major banks and brokerage firms were exhausted within just 10 minutes, and 'open runs' with customers queuing before opening hours were observed at branches. Driven by this success, the KOSDAQ index surged by 4.99% to close at 1,161.13 points, triggering a buy-side circuit breaker for the second consecutive day.
The National Growth Fund is a 150 trillion won policy fund aimed at providing long-term capital to advanced strategic industries such as AI, semiconductors, biotechnology, robotics, and secondary batteries, which are poised to drive Korea's future growth. Notably, the fund is structured to invest 30% of its assets in KOSDAQ and unlisted stocks, and 60% in advanced strategic industries, leading to strong expectations that the KOSDAQ market would be a direct beneficiary. This policy support, coupled with the strength of pharmaceutical and biotech stocks, is identified as a key factor behind the KOSDAQ's sharp rise.
Divergent Trends: KOSPI Defended by Individuals and Institutions Amid Foreign Selling
In contrast to the buoyant KOSDAQ market, the KOSPI market exhibited a different pattern. Foreign investors continued their selling spree for 12 consecutive trading days, recording a net sell-off of 1.9229 trillion won. Despite this, the KOSPI index managed to defend its upward trend, closing at 7,847.71 points, a 0.41% increase from the previous trading day, thanks to net buying by individual and institutional investors. This indicates that domestic investor sentiment remained robust even amidst foreign selling pressure.
While some large-cap semiconductor stocks, such as Samsung Electronics, saw declines due to profit-taking in the KOSPI market, the KOSDAQ market experienced concentrated buying, particularly in the pharmaceutical and biotech sectors, showing a differentiated trend. This suggests that the National Growth Fund, by expanding investments in KOSDAQ companies focused on advanced strategic industries and growth stocks, is helping to address market supply-demand imbalances and provide new impetus.
Is the Revitalization of the Korean Stock Market Sustainable?
The successful launch of the National Growth Fund and the surge in the KOSDAQ market have heightened expectations for the revitalization of the Korean stock market. The government is pursuing various initiatives, including encouraging pension funds to increase KOSDAQ investments (by reflecting the KOSDAQ index 5% in benchmarks) and introducing a KOSDAQ market segmentation system (Premium/Standard segments), to improve the KOSDAQ market's structure and liquidity.
The National Growth Fund, in particular, aims for long-term investment in growth industries rather than short-term gains, which is expected to help mitigate market volatility. KOSDAQ companies with advanced technologies in areas like AI, semiconductors, biotechnology, and robotics are poised to seize scale-up opportunities through this policy support, which could, in turn, drive overall market growth. However, it is crucial for investors to remember that the fund is an investment product whose principal is not guaranteed, and therefore, both potential returns and risks of loss must be carefully considered.
Currently, the KOSDAQ market is experiencing a positive supply-demand environment with continuous net buying from foreign and institutional investors. If this trend continues, the KOSDAQ market is expected to play an increasingly vital role as a new growth engine for the Korean economy. Investors should formulate prudent investment strategies by comprehensively considering the direction of government policies, the growth potential of advanced industries, and the global economic outlook.