Newly listed South Korean stocks saw sharp declines in the first half of the year. According to the Korea Exchange on the 5th, 14 out of 18 companies that went public through general offerings now trade below their initial public offering (IPO) prices. Market analysts attribute the weakness to macroeconomic shocks and supply gaps created by involuntary liquidity withdrawals, compounded by investor focus shifting toward large-cap semiconductor and AI stocks.
Piece Piece Studio and StradVision Record Steep First-Day Losses
Piece Piece Studio, which operates the fashion brand 'Mardi Mercredi,' fell over 36% on its listing day on the 8th of last month. The company had been expected to become a K-fashion unicorn but continued declining for five consecutive trading days through the 12th of the same month. The stock currently trades more than 75% below its IPO price.
StradVision, an autonomous driving software company, opened trading on the 30th of last month at over 8% below its IPO price and closed down the maximum daily limit of 40%. The stock declined for four consecutive trading days following its debut and currently trades 61% below its IPO price. The company's market capitalization shrank from approximately 640 billion won at listing to around 240 billion won.
Only four companies among the 18 new listings maintain prices above their IPO levels: Justech (ultra-precision motion control), Makinarocks (industrial AI), Cosmo Robotics (wearable robots), and License Medical (precision cooling medical devices).
Liquidity Concentration in AI Stocks Drains Support for Small-Cap Listings
IPO demand forecast improvements were implemented in July of last year, strengthening mandatory holding commitments for institutional investors. However, domestic and international macro shocks combined with involuntary supply gaps have proven insufficient to prevent sharp first-day price declines.
Recent regulations on parent-subsidiary dual listings and stricter KOSDAQ delisting requirements have reduced the number of new listings. This has led to overheated bidding for the limited available IPOs, inflating offer prices while short-term profit-seeking capital exits en masse on listing day, according to market analysis.
Market liquidity concentration in AI-related large-cap stocks has also played a role. Oh Kwang-young, researcher at Shinhan Securities, stated that "domestic stock market liquidity has been concentrated in some semiconductor value chains, making investor evaluations more stringent for KOSDAQ newcomers with relatively weak profit structures."
Major IPO Candidates Await Regulatory Clarity in Second Half
The industry anticipates the arrival of major IPO candidates in the second half following the announcement of dual-listing guidelines. Sono International, with a valuation discussed around 3 trillion won, filed for KOSPI preliminary listing review. Cosmetics ODM company B&B Korea and AI infrastructure company Elice Group have also submitted applications for preliminary listing reviews.
Among large corporate affiliates, HD Hyundai Robotics, Hanwha Energy, DN Solutions, and Essex Solutions have selected lead underwriters and are closely monitoring regulatory changes.
FAQ
What percentage of Korean IPOs in the first half trade below their offer prices?
14 out of 18 companies that went public through general offerings trade below their IPO prices, according to the Korea Exchange on the 5th.
How much did Piece Piece Studio and StradVision fall on their listing days?
Piece Piece Studio fell over 36% on its listing day on the 8th of last month and currently trades more than 75% below its IPO price. StradVision fell to the maximum daily limit of 40% on its first trading day on the 30th of last month and currently trades 61% below its IPO price.
Which companies are preparing for IPOs in the second half?
Sono International filed for KOSPI preliminary listing review with a valuation around 3 trillion won. B&B Korea and Elice Group submitted applications for preliminary listing reviews. HD Hyundai Robotics, Hanwha Energy, DN Solutions, and Essex Solutions selected lead underwriters.
