A composed image of secondary-bourse Kosdaq / Yonhap

The secondary-bourse Kosdaq is faring far worse than its global peers, with more than seven out of 10 of its listed companies retreating from the beginning of the year.

Their underperformance, according to analysts, is linked to sluggish private spending as many of the Kosdaq-listed firms produce goods for domestic consumption.

Analysts said global economic uncertainties are also weighing on information technology as well as biotech firms.

They noted that technology stocks are usually for long-term investment, whereas investors are increasingly selling these stocks on the tech-heavy Kosdaq due to the U.S. Federal Reserve's rate cut, heightened tension in the Middle East and other risks that could immediately affect the tech industry.

According to the Korea Exchange, stock prices of 1,263 companies, or 75.4 percent of the Kosaq-listed firms, fell last week compared to the start of 2024.

Around 6.8 percent of these 1,263 businesses suffered more than a 50 percent decrease in their stock prices.

Among these companies were CNH Co., Hyundai Feed Inc., Clinomics and Xplus, the stock prices of which are now worth less than 1,000 won ($0.74).

Correspondingly, the Kosdaq has retreated 11.2 percent since the beginning of 2024 and was ranked second from the bottom in terms of profitability among the stock market indexes of major economies.

Russia's RTS from Moscow was at the bottom after declining 14.8 percent amid the country's prolonged war in Ukraine.

In contrast, the Nasdaq in the United States gained 20.5 percent, while the Nikkei in Japan rose 15.4 percent and the HSCEI in Hong Kong climbed 41.4 percent.

"The lackluster performance of the Kosdaq is related closely to private spending," said Jung Eui-jung, head of the Korean Stockholders' Alliance.

He pointed out that Kosdaq-listed companies are mainly small and medium-sized enterprises (SMEs), which, compared to their bigger, export-oriented peers in the benchmark KOSPI, can't afford to go global.

"They thus concentrate on the domestic market where the high benchmark interest rate and high amount of debt are pressing consumers to cut living costs," Jung said.

He noted that private spending contracted 0.2 percent quarter-on-quarter in the April-to-June period, compared to exports that climbed 0.9 percent quarter-on-quarter over the same time period.

The overall economy contracted 0.2 percent in the second quarter from the previous three months.

A Shinhan Securities analyst said on condition of anonymity that investors appear to be "not patient enough" to invest in IT and biotechnology stocks after the U.S. Federal Reserve cut its policy rate by half a percentage point to a range of 4.75 percent to 5 percent in September.

Such a rate cut came after years of aggressive monetary policy and a rate pause. The pace of the cut was higher than expected.

The analyst said the volatile global oil prices and other risks associated with the Israel-Hezbollah war push investors increasingly to search for safe haven assets over the Kosdaq.