The recent plunge in the domestic stock market has impacted the initial public offering (IPO) market. Most new listings in the third quarter are trading below their offering prices, quickly cooling the enthusiasm for IPO investments that had surged in the second quarter.
According to the Korea Exchange, from July 1 to August 21, the stock prices of eight companies (excluding REITs and SPACs) that went public on the KOSPI and KOSDAQ markets have fallen an average of 25% compared to their offering prices. This decline is steeper than the 19% drop in the KOSPI and 13% drop in the KOSDAQ during the same period.
Among the eight companies, only Ingenia Therapeutics is trading above its offering price, with a gain of 31.4%. The other seven companies have all fallen below their offering prices, with HL Genomics experiencing the largest drop at 57%. Lemon Health Care (-48%), Delicious (-46%), and Gido Industry (-34.6%) followed.
From the first day of trading, the stocks struggled to gain traction. The average return on the first day for the eight companies was just 2.96%. Four of them, or half, traded below their offering prices from the start. Lemon Health Care fell by 6%, while HL Genomics and Delicious dropped by 31% and 27%, respectively.
This situation contrasts sharply with the previous quarter. In the second quarter, the average first-day return for eight newly listed companies was 133%. Three companies—MakinaRax, Polled, and Cosmo Robotics—saw their stock prices quadruple compared to their offering prices, a phenomenon known as 'double-up.' This surge was attributed to a 68% rise in the KOSPI, which drew significant investment demand into the IPO market.
However, the mood shifted as the stock market entered a correction phase in the third quarter. From July to August 21, the KOSPI and KOSDAQ indices fell by 19% and 13%, respectively, leading to a decline in investor sentiment towards newly listed stocks.
Additionally, stricter regulations on dual listings have emerged as a variable in the IPO market. The Financial Services Commission and the Korea Exchange finalized improvements to the dual listing system and guidelines on July 31, which took effect on August 3. These changes strengthen the procedures for obtaining shareholder consent for dual listings of subsidiaries and impose obligations on boards of directors to assess shareholder impact and develop protection measures.
Market analysts predict that geopolitical uncertainties and tightened listing conditions will lead to a wait-and-see approach in the IPO market for the time being. Park Jong-seon, a researcher at Eugene Investment & Securities, stated, "While there are signs of easing in global regional conflicts, the ongoing war still carries an element of uncertainty. Given the stricter listing conditions and regulations on dual listings of large corporate subsidiaries, as well as enhanced delisting criteria in the KOSDAQ market, a cautious stance is likely to persist for now."
However, there are hopes that the listing of major companies in the second half of the year could change the atmosphere. Sono International applied for preliminary review for its KOSPI listing at the end of June, and there is speculation that companies like Gudai Global and Musinsa may also pursue listings.
* This article has been translated by AI.
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