Excitement over electric vehicles and other technology has made South Korea’s stock market one of the world’s best performers in 2023 — and its initial public offerings are doing even better.
(Bloomberg) — Excitement over electric vehicles and other technology has made South Korea’s stock market one of the world’s best performers in 2023 — and its initial public offerings are doing even better.
The 28 stocks that have listed in Seoul this year to date are up by a weighted average of 47% from their IPO prices. That’s ahead of even the nation’s Kosdaq Index of small-caps, which has climbed 26%, outperforming key equity gauges in all major Asia Pacific markets.
The offers have only raised a total of $661 million, as regulators have increased scrutiny of highly valued deals and a number of offerings have been pulled in the wake of poor showings by some high-profile debuts last year. None of this has kept institutional investors away.
“Funds are willing to participate in IPO deals, but they find big deals burdensome,” said Sung Joo Woan, head of the IPO department at Mirae Asset Securities Co. in Seoul. “Instead, they join small deals where they see attractive valuations. Fortunately, many of these deals performed well after going public, helping create a virtuous cycle.”
The top-performing IPO in Seoul so far this year has been baby goods maker Ggumbi Inc., whose shares are currently trading at more than four times where they were priced in its $8 million offering in January. The company’s stock surged by 160% on its first day of trading, a limit for debuts that the exchange is set to increase to 400% starting June 26.
The gains have been not only big but broad. Out of the 28 companies that debuted in Seoul this year, only two are trading below their IPO price.
The good performance of smaller deals “is coming from diverse sectors including biopharmaceuticals, e-commerce, electric vehicles and artificial intelligence,” Mirae Asset’s Sung said. He doesn’t expect large-ticket offerings to come to market before the second half of the year.
The nation’s last major offering was a whopper: LG Energy Solution raised $10.8 billion in January, the world’s largest listing last year. After that, market fluctuations amid rising inflation and interest rates wreaked havoc on IPO valuations, leading to disappointing performances by gamemaker Krafton Inc. as well as the payments and banking units of Kakao Corp.
Korea’s new listings market has rebounded in 2023, outperforming not only local benchmarks but even IPOs in Hong Kong, a traditionally popular venue for big Chinese deals that has been quiet this year. The 18 stocks that have debuted in Hong Kong so far in 2023 are up by a weighted average of 6% since listing.
–With assistance from John Cheng.
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