(Courtesy of Getty Images Bank)
South Korea's IPO market is recovering as EcoPro Materials Co., Doosan Robotics Inc. and other newly listed jackpot stocks attracted investors seeking higher returns while the main stock market remained range-bound.
According to the Korea Exchange on Wednesday, values of 21 of the 30 stocks listed in the fourth quarter remained higher than their IPO prices.
Some of them gave investors stunning profits. Shares of EcoPro Materials, a unit of South Korea's largest maker of electric vehicle battery materials, EcoPro Group, have risen 264% through Dec. 5 since its initial public offering on Nov. 17, while shares of Doosan Robotics, a unit of the local conglomerate Doosan Group, are up 214%.
Green Resource Co., an engineered and advanced materials provider listed on Nov. 24, saw its stock prices rise 75.3%.
According to financial market sources, the domestic IPO market has recovered quickly since EcoPro Materials' listing on the benchmark Kospi.
Few expected the precursor manufacturer's shares to be in the spotlight, as there was muted demand from institutional and private investors ahead of the listing. During bookbuilding, the IPO was only oversubscribed by 17.2 times for institutional investors and 70 times for private investors.
TRADED MORE THAN SAMSUNG
However, retail investors rushed to buy the shares after the listing to seek short-term gains despite concerns about slower growth in the global electric vehicle industry, market sources said.
The shares' trading value totaled 12.2 trillion won ($9.3 billion) since the IPO, surpassing the $7.5 billion value of Samsung Electronics Co., the country's largest market capitalization.
“This is a victory for retail investors,” said Ahn Jung-hwan, CEO of Interlace Asset Management Co. “Retail investors also appeared to be chasing the stocks, hoping to include them in the Kospi 200 index, which is expected to attract passive funds.” ”
EcoPro Materials Kospi Debut Ceremony on November 17, 2023 (Courtesy of EcoPro Materials)
The Kospi 200 index includes the 200 largest companies listed on the main stock exchange and covers approximately 93% of the total market value. A passive fund is an investment vehicle that tracks a market index or specific market segment to determine what to invest in.
REVIVING IPO MARKET
Other companies like LS Materials Ltd. with IPO plans were happy about the fever. LS Materials, an energy storage device maker, has raised more than 10 billion won in subscription deposits from retail investors for its planned listing on the junior Kosdaq later this month.
“Investors seemed to be more focused on IPOs as the secondary market was in a tight range,” said an official at an IPO manager. The Kospi has gained 1.2% so far this quarter and is approaching the 2,500 mark.
The local IPO market was sluggish as many companies such as Seoul Guarantee Insurance had to abandon their IPO plans as higher interest rates hit investor sentiment.
So far this year only seven companies have gone public on the Kospi stock exchange, in 2022 there were more than five, but in 2021, the boom year for IPOs, there were fewer than 16.
LG CNS Co., the information technology services provider of the fourth-largest South Korean conglomerate LG Group, and SK Ecoplant, the construction arm of the second-largest conglomerate SK Group, had planned initial public offerings this year.
They have yet to decide on a timeline due to differing opinions about their company values.
Write to Jeong-Cheol Bae at [email protected]
Jongwoo Cheon edited this article.
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