A 50% surge: three KOSDAQ stocks defy the KOSPI crash
While the flagship South Korean KOSPI index is experiencing one of the deepest declines in its history, the small and mid-cap segment is showing surprising resilience. Shares of HLB, SPG, and Peptron have risen more than 50% over the past month on the KOSDAQ exchange, sharply contrasting with the overall market conditions.
KOSPI Turbulence: The Price of Overheating
July proved catastrophic for KOSPI: the index plunged 22%, and from the all-time high recorded on July 22, the drawdown reached 34%. Only a one-off rebound of nearly 18% on the last trading day of the month managed to reduce the scale of losses. The key trigger was investor concerns about overheating in the artificial intelligence market. Shares of tech giants, including SK Hynix and Samsung Electronics, collapsed by 14.65% and more than 13%, respectively, in a single day, while the 39% drop in U.S. memory maker Micron only added pressure on Korean competitors.
Regulators, attempting to stabilize the situation, tightened trading rules for leveraged ETFs tracking Samsung and SK Hynix shares, raising the minimum cash deposit from 10 million to 30 million won. However, instead of the expected stabilization, this triggered a 93% collapse in trading volumes for these instruments and redirected capital toward smaller companies.
Fundamental Growth Drivers: From Biopharma to Robotics
The rise of these three issuers is not coincidental. HLB, a developer of the anticancer drug rivoceranib, experienced dramatic swings: the FDA rejected approval for the third time, citing production issues at a Chinese partner. However, just two days later, the regulator lifted restrictions on the plant, triggering a nearly 30% surge in shares within a day. This is a classic example of volatility driven by biotech news.
SPG, a manufacturer of high-precision motors and reducers, is benefiting from the humanoid robotics boom. According to analyst estimates, it is the only Korean company with a full range of high-precision reducers for humanoid robots. The company already supplies products to Rainbow Robotics and is in preliminary talks with U.S. partners. Peptron, in turn, rose on rumors of possible involvement in producing Eli Lilly's monthly GLP-1-based drug for obesity treatment, although an official contract has not yet been signed.
My view: The capital shift from blue chips to small caps is not just a speculative story. The market is seeking new growth points outside overheated AI sectors. However, investors should remember: surges of 50% in a month are often followed by equally sharp corrections. These companies have fundamental catalysts, but their realization is a matter of time and regulatory decisions.