The initial public offering (IPO) market in South Korea is cooling down. Despite record levels of trading volume in the domestic stock market, the returns on newly listed shares have decreased. Regulatory uncertainties, prolonged listing reviews, and delays in the submission of securities registration statements are expected to hinder the recovery of new listings this year.
According to the financial investment industry on August 4, the cumulative IPO amount, excluding SPACs and REITs, reached 12.488 trillion won from January to July, a 48.6% decrease compared to the same period last year. The number of IPOs during this time was 21 (one on the KOSPI and 20 on the KOSDAQ), down 53.3% from 45 in the same period last year.
Notably, the drought of IPOs on the KOSPI is particularly striking. This year, there has been only one new listing on the KOSPI, which was K-Bank in March. If the current trend continues, the annual total could be the lowest since 2022 (four listings) and 2023 (five listings). In 2022 and 2023, high interest rates dampened investor sentiment, leading to the postponement or withdrawal of several major listings.
Returns on IPOs have also been disappointing. While the closing price on the first day of trading showed a 121.3% increase compared to the offering price, the returns dropped to 46.7% after one month, -7.0% after three months, and -31.4% after six months, indicating not only low returns but also high volatility.
This situation contrasts sharply with the current stock market environment. The trading volume on the KOSPI has significantly increased compared to last year. In August, the average daily trading volume on the KOSPI is around 27.105 trillion won. Although it has decreased from the peak of 50 trillion won in May and June, it remains high compared to the average daily trading volumes from 2021 to 2025, which were 15.424 trillion won, 9.08 trillion won, 9.603 trillion won, 10.742 trillion won, and 12.4 trillion won, respectively.
The KOSDAQ market reflects a similar trend. This year, the average daily trading volume on the KOSDAQ is 12.379 trillion won, the highest compared to the annual averages from 2021 to 2025, which were 11.861 trillion won, 6.901 trillion won, 10.25 trillion won, 8.394 trillion won, and 7.548 trillion won.
Typically, during bullish market conditions, companies tend to pursue IPOs more aggressively due to increased investor demand and higher chances of successful offerings. However, this year has seen an unusual disconnect between rising trading volumes and the expansion of IPO supply.
One of the main factors contributing to the contraction of the IPO market in the first half of this year is the dual listing guidelines announced in July. Choi Jong-kyung, a researcher at Heungkuk Securities, stated, "The delay in the announcement of the guidelines blocked the market's momentum for several months," adding, "It is unusual that there has been no new KOSPI listing for almost four months following K-Bank's IPO."
Despite the announcement of the dual listing guidelines alleviating some uncertainties and an increase in companies applying for preliminary listing reviews in the second half of the year, industry experts remain skeptical about the recovery of the IPO market. The time taken from preliminary review to actual market entry has significantly increased compared to the past.
In recent years, the listing review process at the Korea Exchange has become more stringent, typically taking over three months for approval. The preliminary review process has become more detailed in assessing corporate value and business viability, and for technology-based listings, additional procedures such as technology assessments and expert meetings have been added.
Moreover, the Financial Supervisory Service is conducting a conservative review of securities registration statements, adding further delays. The level of scrutiny regarding the basis for offering price determination, selection of comparable companies, business outlook, and investment risks has increased, leading to more instances of companies receiving requests for corrections after submitting their registration statements.
An industry insider noted, "In the past, the process from listing review application to actual listing could take as little as four months, but this year, it is expected to take between one to one and a half years. It has become common to plan schedules with the assumption that companies will receive correction requests for their registration statements at least once."
* This article has been translated by AI.
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