As South Korean companies have recently withdrawn their earlier plans to go public, concerns have been mounting that the lackluster initial public offering market remains exposed to lingering external uncertainties in the fourth quarter.
Since October, two companies -- Dreamtech and Plakor -- said in financial statements they would withdraw from IPO plans, citing “the current stock market situation that makes it hard for investors to discover the price of a company.” Dreamtech, an electronic device parts maker, and Plakor, a plastic mold maker for automotive parts, were both aiming to be listed on the top-tier Kospi market. Both companies were at a stage to set the offering price.
On the secondary bourse Kosdaq, seven companies have begun trading since October, but they have largely been influenced by marketwide volatility due to US-China trade war threats and other external uncertainties sweeping the market.
Choi Jong-kyung, an analyst at BNK Investment & Securities, projected 20 companies to carry out book building in November -- an IPO procedure after a company gains preliminary approval by the Korea Exchange and submits a registration document to the Financial Services Commission.
Considering 51 companies had undergone the procedure through end-October, the relatively low monthly figure appears “extraordinary,” he said.
“If companies flock to go on book building at a certain period, a drop in demand for stock subscription is inevitable,” Choi wrote in a note to investors. “Thus, the offering price is likely to be set lower than the anticipated price.”
By Son Ji-hyoung