Today I would like to look into the corporate bond market. The reason this is important is that while there are issues with the stock market itself, you need to understand the difficulties that small and mid-sized companies listed on KOSPI and KOSDAQ, which make up the stock market, are facing in financing.
Ultimately, this is also one reason why KOSDAQ has been driven into such a poor situation. Rather than credit crunch, due to the corporate bond market where "issuance itself and distribution itself" have dried up, investment in small and medium enterprises is becoming truly a "risky choice". No matter how much I want to support KOSDAQ, I myself would not invest in it.
Let me organize the basic variable factors.
1. The government has no measures to address the corporate bond market transaction freeze.
2. Market interest rates have stabilized with a focus on high-quality bonds, but there are gradual upward movements.
3. The issuance market and distribution market are also drying up to freeze levels except for government bonds/high-quality corporate bonds. If the Bank of Korea raises interest rates further in this situation, the felt economic conditions will be extremely contracted.
4. Due to the government's real estate suppression policy's exclusive ban on business loans, as small and medium enterprises' financing through banks is blocked and the corporate bond market is also freezing, companies' situations are not trivial.
5. In terms of indirect financing in the banking sector, AI and semiconductor-related areas are easily allowed access due to the government's policy direction, but other sectors are becoming difficult to access at all.
6. Individual investors are not participating now due to concerns about further rate hikes (bond price decline), and if the Bank of Korea does not provide explicit guidance and present a roadmap for rate increases, there is concern that polarization will reach its peak in the second half. In a rising rate period, there will be no one willing to purchase bonds rated BBB or lower with default risk.
Conclusion
1. You need to understand one by one how messy the current government's economic policy field is.
2. This policy is directly passed on as investment risk for "listed small and medium enterprises". The risk is very large, and it is not easy to invest in KOSDAQ or mid-cap stocks on KOSPI based merely on "expectations".
3. Can we really say that foreign investors and institutions withdrawing funds from KOSDAQ is due to "undervaluation"?
4. While calling for capital market advancement, amendments to the Commercial Act have stopped, and there is a move to introduce a dangerous policy that could undermine foreign investors' expectations about market transparency through regression like the abolition of embezzlement laws. At the same time, the bond market only distributes high-quality bonds and government bonds, and accordingly, the stock market has the following risk factors.
1) Depending on the Bank of Korea's rate hike roadmap, there is a possibility that retail (individual investor) capital will rush into bonds by year-end. This is a burden factor for the stock market
2) If companies' financing freezes, the sudden credit risk in areas where individual investors concentrate, such as KOSDAQ, may increase.
5. Finally. In a situation where small and medium enterprises account for most job creation, the Lee Jae-myung government's employment shock (sharp decline and below expectations) stems partly from the extremely difficult operating environment of these small and medium enterprises.
One of the measures
Rather than having growth funds invest in KOSDAQ equity, we should consider purchasing corporate bonds of venture companies or small and medium enterprises with future potential in the corporate bond market.
Below is a report on the corporate bond market. It covers from the Lee Jae-myung government's election win to the present, and it is on Google Drive.
No one understands the severity of the current issues. Individuals only care about Samsung Electronics and don't really understand how precarious the national economy is.
I am reposting after correcting errors.
The issuance source and data source are
1. Financial Investment Association statistics from the past 1 year
2. The analysis tool is Opus 5.0, and for the narrative, I verified it through double-check searching and reported it as is.
https://docs.google.com/document/d/1MZjfjubekvKkc1vWLqXBU_hTivtAxMpb/edit?usp=drive_link&ouid=114517361703957635844&rtpof=true&sd=true
▶ Original source: https://docs.google.com/document/d/1MZjfjubekvKkc1vWLqXBU_hTivtAxMpb/edit?usp=drive_link&ouid=114517361703957635844&rtpof=true&sd=true
