South Korea’s lackluster initial public offering market is set to gain momentum in October, according to a local brokerage firm Wednesday, with some big names gearing up to get listed.
“Companies that went public on the tech-heavy secondary Kosdaq bourse in August generated an average return rate of minus 18 percent, overall below the average return on the Kosdaq market, which shed 3 percent throughout the month,” analysts at SK Securities said.
Lotte World Tower in Jamsil, eastern Seoul. (Yonhap)
“Big firms such as Lotte REIT, Zinus and Hanwha Systems are planning to go public on the main bourse Kospi next month, which is likely to result in a market rebound,” they added.
Following a disappointing year for the IPO market in 2018 -- with the annual volume of capital raised marking the lowest in five years -- Korea is still struggling to improve the dampened investor sentiment from the continuing US-China trade war.
A total of 16 firms went public on the Kosdaq in the first half of 2019, while only two debuted on the Kospi. Both figures are similar to the number of firms that went public in the same period last year -- 15 on Kosdaq and two on Kospi -- feeding concerns of another slow year for the IPO market.
“In line with growing concerns about a global economic slowdown, investors have flocked to stocks with high growth potential such as telecom equipment firms,” the analysts said.
Several firms that had eyed Kosdaq failed to meet their initial price range for their IPOs and for Kospi firms, market capitalization for the two recently listed firms was lower than the average, according to the analysts.
“But in October, backed by large-scale subscriptions, the IPO market is expected to expand and investor sentiments are projected to partially recover,” they added.
Lotte Reit, the Korean retail giant Lotte’s real estate investment trust launched earlier this year, announced last month it has filed documents for an IPO. About 86 million shares will be offered at a price band between 4,750 won ($3.92) and 5,000 won in late October.
Zinus, a local mattress manufacturer, and Hanwha Systems, Korean conglomerate Hanwha’s defense and aerospace unit, have also filed their IPO papers for approval in recent months, according to industry sources.
By Jung Min-kyung (firstname.lastname@example.org)