Profitable Firms Facing KOSDAQ Delisting Risk Over Small Market Value Can Move to KONEX

Companies that make money but face delisting simply because their market value is too small will get another route: a move to South Korea’s KONEX market. The government announced the measure on the 4th after a market-situation meeting attended by the Ministry of Economy and Finance, the Financial Services Commission and other officials.

The adjustment responds to complaints from businesses after the KOSDAQ market-capitalization delisting threshold rose in July from 15 billion won to 20 billion won. The government said it reflected criticism that delisting a company with no other financial problems was excessive merely because its market capitalization had fallen below the requirement.

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Pressure for higher interest rates is continuing as increased government-bond issuance by countries and corporate-bond issuance by global artificial-intelligence companies are joined by expectations of policy-rate increases in major countries and rising oil prices caused by renewed tensions in the Middle East.

A company may apply to transfer to KONEX if it recorded an operating profit in at least two of the past three fiscal years. It may also qualify if it posted an operating profit in one of those three years and has equity of at least 20 billion won. Companies with capital impairment will not be eligible. If the transfer is approved, the company can move without undergoing liquidation trading and retain its existing price.

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The domestic bond market will be monitored closely, and it will be managed stably so that market volatility does not expand excessively.

The government also postponed by six months a further market-capitalization increase scheduled for Jan. 1. The KOSDAQ threshold will rise from 20 billion won to 30 billion won in July next year. The same KONEX transfer option will apply to KOSPI-listed companies, while the planned increase in the KOSPI threshold from 30 billion won to 50 billion won will also move from January to July.

Officials separately said pressure for higher interest rates was continuing in global government-bond markets because of increased sovereign issuance, corporate-bond sales by global artificial-intelligence companies, expectations of policy-rate increases in major countries and rising oil prices linked to renewed tensions in the Middle East. They said domestic bond-market trends would be monitored closely. Vulnerable borrowers and mutual finance institutions remain broadly sound, officials said, but could face greater difficulties if rates rise sharply. The government also pledged to implement support measures for vulnerable borrowers announced last month.

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Conditions are generally sound so far, but difficulties could intensify if interest rates rise sharply in the future.