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Retail investors perplexed as BTS agency stocks decline

Retail investors scoop up W400b while foreign buyers, institutions turn to massive dumping

Big Hit Entertainment CEO Bang Si-hyuk attends the company’s IPO ceremony at the KRX headquarters in Seoul Thursday. (Yonhap)
Big Hit Entertainment CEO Bang Si-hyuk attends the company’s IPO ceremony at the KRX headquarters in Seoul Thursday. (Yonhap)
Retail investors who bet on Big Hit Entertainment, the agency of K-pop group BTS, face high volatility, as foreign and institutional investors dumped shares to take profits on the new stock.

The company’s stock price closed at 200,500 won ($175.45) per share Friday, plunging 57,500 won, or 22.29 percent, from the previous session’s close, South Korea’s sole bourse operator Korea Exchange said Sunday.

On its market debut on the main bourse Kospi a day earlier, the stock price soared by 30 percent to 351,000 won, but it closed at 258,000 won, down 12,000 won, or 4.44 percent, from its opening price of 270,000 won per share.

Big Hit began its trading at double its offering price, but closed lower on profit-taking. As around 4.4 million shares were traded on the second day, the stock trading value came in at 951.7 billion won on the day.

Triggering the stock plummet were foreign and institutional buyers, which respectively sold 83.1 billion won and 13 billion won of the management agency’s shares over two days. On the contrary, retail investors bought 403.8 billion won of the shares.

After experiencing investment losses, many individual investors have blamed Big Hit’s IPO underwriters for overvaluing the firm’s offering price, although shares are still above that level. Some even protested online, demanding a refund.

Market watchers attributed the sudden slump in the company’s share price to not only the overvaluated offering price, but also the firm’s high dependency on BTS.

With more stocks set to be sold off within the next month, concerns persist among retail investors and market watchers that another possible stock plunge may take place.

During the company’s two-day book building last month, institutions were allotted nearly 4.28 million shares, of which 35.68 percent, or 1.53 million shares, will be available for trading within a month as the compulsory safeguard deposit period ends, according to data by the market watchdog Financial Supervisory Service.

“The firm’s stock price is likely to face more volatility within the next two or three weeks, as institutional investors fulfill their safeguard deposit period,” said Kim Hyun-yong, an analyst at Hyundai Motor Securities.

“However, as we expect the firm to post stronger performance in the fourth quarter, with BTS and Seventeen’s strong album sales outlooks, the price is also likely to move upward toward the end of this year, with the bottom line price set at around 220,000-230,000 won.”

By Jie Ye-eun (
Korea Herald Youtube