[Initial Moment] Ttang and Duplicate Subscription

July 2nd last year, SK Biopharm KOSPI listing ceremony held at Korea Exchange in Yeouido / Photo by Honam Moon munonam@

[Asia Economy Reporter Song Hwajeong] At the center of the fierce public offering (IPO) investment craze that has been sweeping since last year was the term ‘Ttah-sang.’ Ttah-sang is a newly coined term referring to a public offering stock whose opening price on the first day of listing is set at double the offering price and then closes at the upper price limit. It began to be widely used following the listing of SK Biopharm last year.

SK Biopharm, which was listed in July last year, was a highly anticipated IPO, attracting full market attention even before its listing. After listing, it soared to the upper price limit for three consecutive days, achieving a remarkable ‘Ttah-sang-sang-sang.’ Within three days of listing, its stock price jumped to 214,500 KRW, marking a 338% increase compared to the offering price of 49,000 KRW. Following this, another major IPO, Kakao Games, recorded a Ttah-sang-sang by hitting the upper price limit for two consecutive days after listing, and SK Bioscience, which marked the start of this year’s major IPOs, also recorded a Ttah-sang.

After COVID-19, abundant liquidity flowed into the market, fueling the stock investment fever, and Ttah-sang ignited investor sentiment. Since receiving a public offering stock and achieving just a Ttah-sang would yield a 160% profit, funds began to pour into public offerings.

As funds flooded in, the competition rate for public offering subscriptions skyrocketed, and record-breaking subscription deposits poured in. Among the 37 companies that conducted demand forecasting this year, all but five recorded triple-digit competition rates. In particular, SK IE Technology (SKIET), which was listed last month, recorded a competition rate of 1,883 to 1 in the demand forecasting for institutional investors. This is the highest ever across both KOSPI and KOSDAQ. Subsequently, in the general public offering subscription, a record-breaking deposit of 80.9017 trillion KRW was collected, setting another all-time high.

The public offering investment craze also changed the system. After COVID-19, individual investors, whose influence in the stock market grew, raised their voices for expanded opportunities to invest in public offerings, leading to the introduction of an equal allocation system. Until then, public offering subscriptions were conducted by proportional allocation, where the more deposit you put in, the more shares you could receive. This led to a negative perception that only wealthy people could profit from public offerings. As demands for expanding individual investors’ opportunities grew, the system changed to equal allocation, distributing shares to all investors who paid the minimum subscription deposit. Accordingly, from this year, 50% of the public offering shares allocated to general subscribers are distributed equally. In a situation where investment fever was already at a peak, the introduction of the equal allocation system further overheated public offering investments. Securities firms preparing for major IPO subscriptions were almost paralyzed by investors trying to increase their accounts to receive even one more share.

In response to this irrational investment frenzy, the government decided to ban multiple subscriptions starting from the 20th of this month.

It is difficult to expect healthy development in such an overheated situation. The undefeated Ttah-sang myth of major IPOs, which seemed to continue indefinitely, was broken when SKIET, which had received the market’s highest expectations with record-breaking achievements, closed down on its first day of listing instead of achieving Ttah-sang. Investors who chased the stock expecting Ttah-sang suffered losses.

Major IPOs such as Kakao Bank, Kakao Pay, Krafton, and LG Energy Solution are scheduled for the second half of the year, so the public offering investment fever is unlikely to subside easily. However, it is hoped that the ban on multiple subscriptions introduced this month will help cool down the irrational investment fever to some extent.

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