HLB, SPG, and Peptron have each surged more than 50% over the past month on the KOSDAQ, South Korea’s secondary stock exchange for small and mid-cap firms. The rally comes even as the KOSPI, Korea’s main index, struggles to recover from a historic crash.
Regulators tightened rules on leveraged exchange-traded funds (ETFs) in late July, and a global AI-driven selloff hit chipmakers. Both forces pulled money out of KOSPI heavyweights and into smaller KOSDAQ names.
KOSPI’s Rough Month
The KOSPI fell 22% in July, one of its largest monthly drops on record, after tumbling as much as 34% from a July 22 record high before a nearly 18% single-day rally on the final trading day cut the losses.
Regulators blamed single-stock leveraged ETFs tracking Samsung Electronics and SK Hynix for the swings. They raised the minimum cash deposit for trading those products from 10 million won to 30 million won.
Trading in the affected ETFs has since collapsed by as much as 93%. However, the KOSDAQ small-cap rally followed instead of a calmer market. The KOSDAQ notched five straight gaining sessions through August 6, even as the KOSPI kept swinging.
A separate AI-linked selloff has weighed on KOSPI heavyweights. On July 28, SK Hynix closed 14.65% lower and Samsung Electronics dropped more than 13% on fears that AI infrastructure spending was peaking. Micron’s 39% plunge added to the pressure on Korean memory makers.
Why the Three Stocks Are Rallying
HLB’s rally follows its cancer drug rivoceranib. The Food and Drug Administration (FDA) rejected the drug for a third time on July 13, citing manufacturing concerns at a partner’s Chinese plant. Two days later, the FDA cleared that facility, sparking a single-day surge of nearly 30%.
SPG, a motor and precision-reducer maker, is rallying on its push into humanoid robot actuators. IBK Securities has called it the only Korean firm with a full lineup of humanoid-grade precision reducers. SPG already supplies Rainbow Robotics and is in early talks with US firms.
Peptron jumped on August 3 on obesity-drug supply chain speculation. Investors bet Korean manufacturers could handle domestic production for Eli Lilly’s once-monthly GLP-1 treatment. No supply contract has been confirmed yet.
Morgan Stanley’s KOSPI upgrade suggests some investors see the crash as a buying opportunity rather than a lasting setback. Whether the KOSDAQ’s rotation trade holds may depend on how quickly the KOSPI stabilizes.
Bitrue