Effects of Creative Economy

 

There is growing anticipation that Korea’s IPO market will be hugely successful in 2014, the second year of the Park Geun-hye administration. 

The reason for high expectations lies in the fact that the global economic recovery is likely to pick up pace this year. Moreover, medium and large companies’ preparations for an initial public offering (IPO) in the KOSDAQ market is going to swing into high gear in 2014, so that they can get benefits from President Park Geun-hye’s “creative economy” policy initiatives. On top of that, US and Chinese companies are knocking on the door of Asia’s fourth-biggest equity market. As a result, the total IPO amount is projected to approach as much as 4 trillion won (US$3.8 billion) this year, more than a two-fold increase from 2013. 

According to sources in the financial investment industry on Feb. 16, 60 companies, including Hyundai Oilbank, BGF Retail, Dongbu Life Insurance, and KT Rental, are going to be listed this year. Their total IPO price is estimated to be between 2.5 trillion won (US$2.3 billion) and 4 trillion won (US$3.8 billion). Last year, the number of IPO cases on the KOSDAQ stock exchange stood at 40, and their amount equaled 1.31 trillion won (US$1.24 billion). The phenomenon is attributable to the fact that the IPO market in 2013 was in the doldrums.

Blue chip stocks, such as those of Interpark INT that went public this year, recorded nearly 1000 to 1 in the competition rate, and stock prices for blue chip companies continue to hit the upper price limit, following their IPOs. 

A source in the investment banking industry said, “I think that companies held by private equity firms, and small and medium-sized startups such as those listed on the Korea New Exchange (KONEX), which are going to graduate to the KOSDAQ in the end, will invigorate the IPO market, together with large companies’ listings.”

Investors’ confidence is also on the rise, since the new listings on the KOSDAQ market by subsidiaries of large corporations is kicking into high gear, in tandem with the government’s policy to encourage IPOs. Last year, only Hyundai Rotem posted the 100 billion won (US$94 million) line in IPO price among listed firms. However, ten companies are predicted to exceed the figure, including Hyundai Oilbank, which is expected to reach 1 trillion won (US$943 million) or more in the IPO amount this year.

Investors are active in the market as well. With stock prices for the Korea Information Certificate Authority and Interpark INT skyrocketing, a large number of people are seeking to purchase those companies’ stocks in the over-the-counter (OTC) market, prior to their listings on the KOSDAQ market. BGF Retail’s stock price in the OTC market, on the other hand, has risen more than 30 percent within the month. 

Overseas companies’ listings are also expected this year. In particular, the entry of companies from Europe, the Philippines, and the US in the market is likely to increase the attraction of the securities market. 

To be specific, US big data company PSI is preparing to be listed. Content Media Corporation, a London and LA-based film, television, and digital sales company, is finalizing its selection of an IPO organizer. Tongrentang, a state-run pharmaceutical company in China, is also aiming at its listing on the KOSPI. In addition, the Philippine BXT Corporation, which is engaged in the hotel and resort business, already concluded an IPO organizer contract with Samsung Securities to be listed in the securities market. M-BIZ Global, a leading provider of mobile content solutions based in Switzerland, also made an IPO organizer contract with Kiwoom Securities, eyeing its listing on the KOSDAQ stock exchange.

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