Investments Lost Direction 31 Trillion Won... Flowed into SK Biopharm

Subscription Deposit Amount Reaches 30.9889 Trillion Won... Breaking Cheil Industries' Record and Setting an All-Time High

On the 24th, investors were subscribing to SK Biopharm's public offering at NH Investment & Securities Myeongdong WM Center. (Photo by NH Investment & Securities)

[Asia Economy Reporter Kum Boryeong] Ahead of SK Biopharm's listing on the KOSPI market scheduled for the 2nd of next month, more than 30 trillion won in subscription deposits poured into the general subscription, marking a major event demonstrating the power of idle funds in the market.

According to NH Investment & Securities on the 25th, the total subscription deposits from the SK Biopharm general subscription held on the 23rd and 24th amounted to 30.9889 trillion won. This surpassed the previous record of 30.0649 trillion won set by Cheil Industries six years ago, setting a new all-time high. The number of shares allocated for SK Biopharm's general subscription was 3,915,662 shares, but a total of 1,264,853,070 shares were applied for, resulting in a competition rate of 323.02 to 1. Under these circumstances, an investor who deposited 100 million won would receive about 12 to 13 shares.

The competition rates by securities firms were as follows: Korea Investment & Securities at 351.09 to 1, NH Investment & Securities at 325.17 to 1, Hana Financial Investment at 323.32 to 1, and SK Securities at 254.47 to 1. On the last day of subscription, the previous afternoon, the subscription websites of some securities firms temporarily crashed, showing the intense popularity of SK Biopharm.

The success of SK Biopharm is underpinned by abundant liquidity. Due to concerns over economic deterioration caused by the novel coronavirus disease (COVID-19), the Bank of Korea lowered the base interest rate to 0.5%. With deposit and savings interest rates at commercial banks effectively at zero, failing to guarantee returns, investment funds flowed into the securities market. According to the Korea Financial Investment Association, as of the 23rd, investor deposits amounted to 47.3872 trillion won. Additionally, funds hovering around the stock market are believed to have flowed in. The scale of idle funds classified as money market funds (MMF), comprehensive asset management accounts (CMA), and demand deposit savings accounts reached 1,119 trillion won as of the end of April. As these funds poured into this subscription, securities firms' counters were reportedly busier than usual.

An industry insider said, "Since a company with technological capabilities is being listed at a reasonable price, general investors showed high interest," adding, "Expectations that returns will be higher than existing stocks spread, making the subscription fever hotter than anticipated."

Investors are buoyed by the expectation that the stock price will inevitably rise once they receive the shares. On online communities where stock investors gather, posts such as "put money in and make money" and "subscribe no matter what" are frequently seen. Securities firms also forecast a high market value for SK Biopharm after listing. Choi Jong-kyung, a researcher at Heungkuk Securities, analyzed, "The value of nine new drug pipelines specialized in central nervous system diseases, including 'cenobamate,' will be highlighted," and added, "Also, the relatively small number of circulating shares and the expected future inclusion in the KOSPI 200 index are likely to positively influence market variables."

However, concerns about the bio sector remain. Interest in the bio sector surged after the spread of COVID-19, causing stock prices to rise significantly, but companies like SillaJen and Kolon TissueGene are now facing delisting. SK Biopharm also warned in its investment prospectus that "If sales of cenobamate, which has received market approval, are lower than expected or if clinical progress and technology exports of other pipelines do not proceed as planned, it could negatively impact financial stability and shareholder value."

This content was produced with the assistance of AI translation services.