The Korea New Exchange (KONEX) for venture firms and small and mid-size enterprises (SMEs) and the Korea Exchange (KRX) Gold Market for the legalization of the underground economy has yielded less than 5 million won during their first year.
According to the KRX, the KRX earned just 4,219,330 won (US$3,899.75) on the KONEX between July 1, 2013 and June 30 this year. The daily average trading volume was 37,000 shares between January and June this year, whereas the average had been 60,000 shares from July to December 2013. The trading value dropped from 388 million won (US$359,008) to 267 million won (US$247,049) per day, too.
The KONEX is failing to fulfill its main purpose, which is to create financing for SMEs. Only 13 companies benefited from the exchange one year after its opening, while 58 companies were listed on it as of July this year. Besides, just two of them succeeded in IPO-based capital increases.
The gold spot market, which opened in March 2014, exempts the participants from trading and membership fees until March 2015. In other words, the KRX’s income from the two new bourses is limited to the 4,219,330 won. In contrast, the KRX spent a total of 450 million won (US$46,178) on opening the KONEX, establishing the system, marketing and so on during the same one-year period, while paying 1.846 billion won (US$1.706 million) to its 20 employees in the KONEX Division.
The investment in the gold spot market was even larger. Specifically, 2.75 billion won (US$2.54 million) was spent on system setup and events, and the five staff members take home 430 million won (US$397,870) combined a year. This means as much as 2.9515 billion won (US$2.7310 million) was poured in the KRX Gold Market for just six months.
“The KONEX has been shunned by investors and the Gold Market has been degenerated into a speculative market,” Democratic United Party lawmaker Kang Ki-jung criticized, continuing, “Both of the markets are likely to affect the performance of the KRX for the time being with no growth opportunity being found.”
Back in March this year, KRX President Choi Kyung-su said, “The KRX Gold Market will contribute greatly to the legalization of the underground economy and the development of the jewelry industry,” adding, “It will lead to the creation of luxury brands like Cartier, so that Korea can continue its Hallyu in the jewelry industry.”