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It's been a little over a month... since the launch of Korea's new stock market...., the
Korea New Exchange, or KONEX,... designed specifically for startup companies in the
country.
It was launched as part of President Park Geun-hye's push to create an environment...
where fledgling businesses can flourish.
So how is the market doing one month in?
Our Yoo Lian ... has the figures. What you're seeing here is the production process for
an ingot,... aluminum heated past its melting point and molded into bars that can later
be used to make bicycles or auto parts.
The manufacturer of these ingots is Standard Firm,... a startup that is preparing to be
listed on the tech-heavy Kosdaq market.
The company's shares jumped by more than six times after being listed on the Konex last
month.
"We are planning to get listed on Kosdaq but we feel that the Konex is a good opportunity
for us to practice before moving up. We are learning a lot, particularly through our contacts
with investors."
Like Standard Firm, startups welcome the creation of their own market.
"The United States has its thriving Silicon Valley,... but over here in Korea, there's
this so-called 'Death Valley.' It's a term coined to describe the many fledgling companies
which can't acquire the necessary funds to expand,... and end up going bust."
That's because unlike Silicon Valley, there's no eco-system in Korea to support entrepreneurs
as they turn their ideas into businesses.
As a result, most startups have to rely on bank loans, thereby increasing their interest
burden.
So the Konex is a means of saving fledgling companies from heavy debt burdens.
But in its first month, the Konex's trading volume was very low.... and of the 21 listed
companies, only two saw their stocks traded on a daily basis.
"Limited trading activity is expected at this point. There are only 21 companies listed
right now,... but the government's plan is to increase that number to at least 50 by
the end of the year. We need more companies to boost trading."
For that to happen,.. he says,... the government needs to give tax breaks and other incentives
to venture capitalists and investors so they can start putting their money into startups.
Yoo Li-an, Arirang News.