Rising Rookie Stocks, Shaky First Day of Listing Challenges Unbeaten Record

Simultaneous Listing of 4 Companies... 2 Close Below IPO Price
October IPO Initial Price Yield at 97.6%
Need for 'Sorting the Wheat from the Chaff' Amid IPO Overvaluation Debate

The undefeated streak of winning in IPO market public offering investments has come to a halt. Since the expansion of the price fluctuation range on the first day of listing, investors participating in public offering subscriptions have achieved high returns on the first day of listing. Funds poured into the IPO market, and naturally, the number of pre-listing companies setting the public offering price above the upper limit of the expected price range increased. Then, amid bubble concerns, new stocks fell below the public offering price on the first day of listing. Experts urge that investors should carefully select stocks in the IPO market going forward.

According to the financial investment industry, among the four newly listed companies on the KOSDAQ market on the 9th, Contec closed at 15,920 won, down 29.24% from the public offering price. It was listed at 22,500 won but started trading at 19,700 won. Although it rose to 21,050 won in the early session, the decline widened as time passed. In the afternoon, it dropped to 15,360 won. It closed the day without even approaching the public offering price.

BI Matrix started trading at 17,040 won, 31.07% higher than the public offering price of 13,000 won. However, the stock price continued to retreat and closed at 11,660 won. This is 10.31% lower than the public offering price and 32.99% lower than the intraday high.

Qurocell and Megatouch rose 8.5% and 16.46% respectively compared to their public offering prices. Qurocell fell below the public offering price around 2 p.m. but later recovered the decline and turned upward. Megatouch rose compared to the public offering price but closed at 5,590 won, nearly 30% lower than the 7,950 won recorded immediately after listing.

Among the four newly listed companies, two fell below the public offering price. Last month, there were no new stocks that fell below the public offering price on the listing day. The average initial price return compared to the public offering price for nine companies listed last month was 97.6%. The average closing price return on the listing day was 44.5%. Park Jong-sun, a researcher at Eugene Investment & Securities, explained, "The initial price return compared to the public offering price has recorded the highest cumulative rate of 79.3% this year until October," adding, "High returns have been reflected since the expansion of the price fluctuation range was applied from the end of June."

As public offering investors recorded high returns on the listing day, funds poured into demand forecasting and public offering subscription markets. From the 2nd to the 3rd, the subscription deposit for Aicland reached 6.2603 trillion won. SW Steeltech, which conducted subscriptions a day earlier, also recorded deposits exceeding 1.57 trillion won.

Market funds flowed into the IPO market, and public offering prices rose. Among nine companies that conducted demand forecasting for institutional investors last month, eight set their public offering prices above the upper limit of the expected price range. Stormtech, Dongin Kiyun, EcoEye, Green Resource, Hanseon Engineering, Aestec, A-Tom, LS Materials, Y-Biologics, and K& S will conduct demand forecasting this month. Stormtech and EcoEye, which completed demand forecasting, set their public offering prices above the upper limit of the expected range.

Choi Jong-kyung, a researcher at Heungkuk Securities, explained, "Since the expansion of the price fluctuation range for newly listed stocks was implemented at the end of June, the stock price trends on the listing day still reflect the initial confusion period of the system," adding, "As the number of newly listed stocks increases, the fluctuation range on the listing day narrows and the peak price lowers." He also added, "We are also confirming that the closing price level is stabilizing."

The financial authorities expanded the price fluctuation range on the first day of listing, expecting early formation of an appropriate equilibrium price. As volatility increased, speculative funds seeking short-term high returns poured in. As public offering investors began to earn high returns, the number of investors wanting to subscribe to public offerings increased. Pre-listing companies and underwriters started raising the public offering price. Venture capital (VC) investors and financial investors (FI) who invested in unlisted companies achieved high returns through IPOs. The number of companies seeking listing increased, and four companies were listed simultaneously in one day. It is difficult to conclude that the bubble has burst just because some listed companies’ stock prices fell below the public offering price on the first day. However, experts expect the overheated trend in the early stage of the system to gradually subside. They advise carefully selecting stocks before subscribing.

A financial investment industry official explained, "The concentration phenomenon is unlikely to continue for a long time," adding, "Looking at the stock price trends of newly listed companies, many cases show a sharp rise on the first day followed by a retreat." He further analyzed, "As cases of price declines on the day after listing increase, stock prices often fall from the afternoon of the first day. Public offering investment returns are also expected to gradually stabilize."

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