[Post-IPO] Who Is the Winner in Early-Year Rookie Stock Returns?

[Image source=Yonhap News]

[Asia Economy Reporter Park Jihwan] The average return on stocks newly listed on the KOSPI and KOSDAQ this year has reached 52%. Considering the recent sluggishness in the domestic stock market due to the Federal Reserve's (Fed) early tightening and the overlapping geopolitical risks between Russia and Ukraine, this is regarded as a relatively strong performance.

According to the Korea Exchange on the 14th, the stock prices of eight companies newly listed through initial public offerings (IPO) since the beginning of the year (as of the 11th) have risen by an average of 51.8% compared to their offering prices. Considering that the KOSPI and KOSDAQ fell by 7.72% and 15.14%, respectively, during the same period, investing in IPO stocks has yielded substantial returns.

Researcher Lee Woongchan of Hi Investment & Securities said, "Since the beginning of this year, the U.S. Federal Reserve has accelerated the pace of monetary policy tightening, and the rise in real interest rates has caused declines mainly in high-valuation stocks," adding, "Unexpected Russian geopolitical risks and rising commodity prices have also emerged as new risk factors," identifying the causes of the market decline.

On the KOSPI, LG Energy Solution, considered the largest IPO in history, has recorded a 60.1% return since its listing. LG Energy Solution debuted on the 27th of last month with an opening price of 597,000 KRW, ranking second in market capitalization on the KOSPI. After a dazzling market entry, the stock price plunged by 15.41% and 10.89% on the first and second days of listing, respectively, due to profit-taking, falling to the 450,000 KRW range, but has slightly recovered to the 460,000 KRW range. Although it failed to achieve the highly anticipated "ttasang" (opening at twice the offering price and hitting the upper limit), it has earned a high profit of 150,000 KRW per share.

On the KOSDAQ, Auto&?an automotive parts development and distribution company spun off from Hyundai Motor Group's in-house venture?recorded the highest return of over 180%. The rise in Auto&'s stock price was somewhat anticipated due to its high subscription competition rate. The offering price was set above the expected range during institutional demand forecasting, and the subscription competition rate reached 2,395.63 to 1, attracting popularity. Since its listing on the 20th of last month, Auto&'s stock price has risen 181.13% compared to the offering price as of the day before yesterday. The stock hit the upper limit on the first and second days of listing, soaring significantly. The current stock price fluctuates around 14,000 KRW, nearly three times the offering price of 5,300 KRW.

Next, Sconex, which focuses on metaverse virtual reality (VR) games as its main business, also showed a return exceeding 100%, rising 107.69% compared to the offering price. K-Auction was the first stock to achieve "ttasang" this year. Its current stock price is 30,000 KRW, up 50%. On the other hand, Narae Nanotech (-18.57%), Easytronics (-13.18%), and Adbiotech (-9.57%) have shown sluggish stock price trends below their offering prices.

The IPO market this year initially raised expectations with the consecutive listing attempts of large-scale stocks such as LG Energy Solution, but the current atmosphere has changed significantly. Hyundai Engineering postponed its listing plan after failing to reach a demand forecast competition rate of 50 to 1 at the end of last month, dampening the enthusiasm for IPO investments.

The public offering market environment this year is expected to be more challenging than last year. Eugene Investment & Securities estimated the expected market capitalization of the IPO market in February this year to be between 1.3 trillion and 1.5 trillion KRW. This slightly exceeds the average market capitalization of 1.3 trillion KRW for February listings historically but falls far short of last February's 3.825 trillion KRW.

Researcher Park Jongsun of Eugene Investment & Securities stated, "Although the number of companies listing in February this year significantly exceeds the average, the amount raised and market capitalization are expected to slightly exceed average levels."

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