1. Korea’s IT Industry & Kosdaq
ATRE 2003
Korea’s IT Industry & Kosdaq
- A Silver Lining in Korea -
Ho Joo Shin
President & CEO
Kosdaq Stock Market Inc.

2. Table of Contents I. Economy Review II. Korea’s IT Industry
III. Kosdaq’s Contribution to the IT Industry
IV. Kosdaq Review
V. Challenges & Opportunities for Kosdaq
VI. The Future of Kosdaq 2

3. I. Economy Review
Korean economy before & after the Asian financial crisis
(Unit : US$ mil.)
1997
1998
2000
2002
2003.2
GDP Growth Rate
5.0%
-6.7%
9.3%
6.3%
4.5%2)
Foreign Exchange Reserves
3,9401)
52,041
96,198
121,412
123,988
Current Account
-8,167
40,365
12,241
6,092
-368.9
1) as of Dec
2) estimation by Goldman Sachs 3

4. I. Economy Review Growth Factors revitalizing the economy
Successful macro-economic policies for
revitalizing the economy
Continuous corporate & financial restructuring
Intensive investment in new industries: IT
Kosdaq facilitating capital funding 4

5. I. Economy Review
Korean economy before & after the Asian financial crisis
(unit : US$ mil.)
1997
1998
2000
2002
2003.2
GDP Growth Rate
5.0%
-6.7%
9.3%
6.3%
4.5%2)
Foreign Exchange Reserves
3,9401)
52,041
96,198
121,412
123,988
Current Account
-8,167
40,365
12,241
6,092
-368.9
1) as of Dec
2) Estimation by Goldman Sachs 5

6. * Source: Korea Information Society Development Institute
II. Korea’s IT Industry
Review of the IT Industry
2000
2001
2002 (E)
Total IT Production (KRW tril.)
(Growth Rate)
145.2
(26.3%)
150.5
(3.7%)
189.1
(25.6%)
Global Market Share
6.22%
6.35%
6.38%
* Source: Korea Information Society Development Institute 6

7. * Source: Korea Information Society Development Institute
II. Korea’s IT Industry
Review of the IT Industry
2000
2001
2002 (E)
Value Added Amount
of IT Industry (KRW tril.)
68.1
70.2
88.4
IT Contribution to Exports
29.7%
25.6%
28.5%
Total Trade Balance (US$bil.)
- 8.5
9.54
10.8
IT Trade Balance (US$bil.)
9.4
10.6
14.8
* Source: Korea Information Society Development Institute 7

8. II. Korea’s IT Industry Outlook for the IT Industry
IT Production (KRW tril.)
(Growth Rate)
212.3
(12.3%)
241.5
(13.8%)
265.8
(10%)
IT Export 1) (US$bil)
33.7
(13.5%)
38.1
(13.1%)
43.2
(13.4%)
1) Exclusion of semiconductor exports 8

9. II. Korea’s IT Industry Growth Drivers
No. 1 global market share in DRAM & TFT-LCD
Strong IT infrastructure
- CDMA
- High-speed internet services
China as major export market for Korean IT companies
Key issues to be considered
Excessive investment in 3G services and products
China as competitor in local IT industry 9

10. III. Kosdaq’s Contribution to IT Industry
Financing Activities
(KRW bil.)
1999
2000
2001
2002
Total
IPO in Kosdaq
2,108
(110)
2,569
(182)
1,316
(144)
1,121
(122)
7,120*
Rights Issue
3,286
5,172
1,572
679
13,060*
Corp. Bonds
1,562
3,153
2,985
2,132
12,546*
Total amount of
capital raised
6,956
10,894
5,873
3,932
32,726*
1) Figures in parenthesis refers to number of IPOs
2) *= total amount since the inception of Kosdaq in 1996 10

11. III. Kosdaq’s Contribution to IT Industry
Kosdaq in support of the IT industry
Enhance IT firms’
Brand value
by Kosdaq listing
Direct Financing
Opportunities for
SMEs and venture firms
Develop and nurture
entrepreneurship

12. < Listed Companies > < Daily Trading Value >
IV. Kosdaq Review
A success story and thereafter
(KRW bil.)
’97
’00
’01
’02
’03.3
Listed Companies*
359
540
702
830
857
IT Companies -
293
356
364
Venture Companies
244
353
239
398
Market Cap.*
4,207
23,028
50,749
37,403
33,088
Daily Trading Value 4
2,400
1,728
1,205
832
* Exclusion of mutual funds
< Listed Companies >
< Daily Trading Value >

13. Accumulated Trading Value
IV. Kosdaq Review
Global Status of Kosdaq
(in US$ bil.)
Rank
Market Cap.
Accumulated Trading Value 1
NYSE (9,015)
NYSE (10,311) 2
Tokyo (2,069)
Nasdaq (7,254) 3
Nasdaq (1,994)
London (3,998) 4
London (1,785)
Euronext (1,987) 14
KSE (216) 12
KSE (593) 32
Kosdaq (31) 18
Kosdaq (246)
* as of December 2002 13

14. V. Challenges & Opportunities for Kosdaq
Transparency & Fairness
Volatility and uncertainty
Market downturn
Listed companies’ transfer to KSE
Challenges
Increasing number of IT companies
Active IPO market
Improving performance of IT firms
Government policy for securities
market growth
Opportunities 14

15. < Market Capitalization > < Kosdaq Composite Index >
V. Challenges & Opportunities for Kosdaq
Market Downturn
Record high in 1999 followed by prolonged correction
< Market Capitalization >
< Kosdaq Composite Index > 15

16. V. Challenges & Opportunities for Kosdaq
Kosdaq companies’ transfer to KSE
1999
2000
2001
2002
Number of Companies
Moving to KSE 5 3 2 7
* As of April 4, 13 companies have decided to transfer to KSE. 16

17. V. Challenges & Opportunities for Kosdaq
Kosdaq’s Tasks
Stricter listing & de-listing criteria
Sound corporate governance
Stricter disclosure rules
Transparency
Heavier penalties for insider trading
& price manipulation
Implementation of class-action suits
Fairness
Upgrade in trading system
Introduction of new investment products
( ETF, REITs, Bonds, Warrants)
Efficiency 17

18. V. Challenges & Opportunities for Kosdaq
Transparency & Fairness
Volatility and uncertainty
Market downturn
Listed companies’ transfer to KSE
Challenges
Increasing number of IT companies
Active IPO market
Improving performance of IT firms
Government policy for securities
market growth
Opportunities 18

19. V. Challenges & Opportunities for Kosdaq
Increasing number of IT companies
1998
1999
2000
2001*
2002*
(1st half)
Total number of
IT companies
10,218
12,382
13,944
17,719
20,148
Number of Small &
medium IT ventures
10,055
12,105
13,629
17,416
19,845
Number of New IT
Ventures
808
2,050
1,524
3,787
2,429
* = Estimates
Source : KISDI 19

20. Number of IPOs on Kosdaq
V. Challenges & Opportunities for Kosdaq
Active IPO Market
Kosdaq is the IPO market of choice in Korea
1999
2000
2001
2002
2003.3
Number of IPOs on Kosdaq
(amount raised)
110
(2.1)
182
(2.6)
144
(1.1)
122 26
(0.16)
Number of IPOs
On KSE 17
(2.9)
(0) 2
(0.1) 8
(1.3) 1
(0.005)
* IPO amounts are in KRW tril. 20

21. V. Challenges & Opportunities for Kosdaq.1
V. Challenges & Opportunities for Kosdaq
Ongoing growth of IT & Kosdaq
2000
2001
2002
2003.3
Number of IT Companies
211
296
373
364
Total Number of Listed Companies
540
702
830
857
Proportion of IT Companies (%)
39.1%
42.2%
44.9 %
42.5%
< Market Cap. of IT Companies >
< # of IT / Non-IT Companies > 21

22. V. Challenges & Opportunities for Kosdaq
IT-Oriented Market
35 out of 50 largest companies on Kosdaq are IT-related
(in KRW tril. )
Rank
Name
Market
Cap. 1
KTF
4,578 18
KH Vatec
256 36
Handysoft 96 4
LGT
1,092 21
LGM
182 38
INTOPS 94 5
SBS
874 24
IDIS
169 39
P&TEL 93 6
Hanaro
776 25
SEROME
154 40
YTN 92 8
Daum
569 27
SSC
128 42
Neowiz 87 9
NHN
512 28
KT Hitel 43
Ace Digitech 86 10
Humax
425 29
AHNLAB
120 45
Taesan LCD 84 11
LGHS
420 30
PKL
117 46
FINE DNC 83 12
Ncsoft
413 31
INTERFLEX
116 48
Motor & Tech
81.6 13
Auction
412 32
HBS
105 49
Telson
79.6 14
CJHS
380 33
DGI
100 50
DNPS
75.6 17
You Eal
264 35
Baiksan OPC 98

23. V. Challenges & Opportunities for Kosdaq
Performance of Kosdaq IT Firms
Kosdaq IT firms show superior performance to KSE listed
Manufacturing companies
(Dec. 2002)
Revenue growth
Debt ratio
ROE
Kosdaq IT Firms 1)
31.89%
78.6%
11.43
KSE manufacturers 2)
5.10%
109.86%
5.10
35 largest IT companies on Kosdaq
498 manufacturers on KSE 23

24. V. Challenges & Opportunities for Kosdaq
Government Policy
The new government is to promote securities market
To create long-term demand for securities
Long term market stabilization plan
Pension funds
To enhance market transparency
Class action law suits
Accounting standards reform 24

25. Asia’s Hub Stock Exchange
VI. The Future of Kosdaq
Kosdaq’s Vision
Korea as
‘Northeast Asia’s
IT and R&D hub
Kosdaq as
Asia’s Hub Stock Exchange
With World Class
Competitiveness
Korea & Kosdaq’s Survival Strategy :
Strong IT industry 25

26. Clearing the way for brighter future ….

27. Kosdaq Stock Market Inc.
Thank You 27