Companies avoid IPOs amid uncertainties
A growing number of companies have begun delaying their planned public offerings, as the domestic stock market has become sluggish following the intensifying global trade war, according to market analysts, Monday.
The analysts said the nation’s initial public offering (IPO) market will shrink for a while, given that Japan’s economic retaliation against Korea and the trade dispute between the United States and China are likely to linger.
CarrieSoft is among the firms that withdrew its planned IPO amid the recent market uncertainties.
On Aug. 7, the children’s content creating company announced it submitted a document to the Financial Services Commission to cancel its planned IPO.
“Although we used book-building to determine the initial offering price, we faced difficulty in getting our company appraised properly,” the company said that day. “With the consent of our IPO underwriter, we decided to cancel our plan to be listed on the Kosdaq.”
The announcement was made a day after the company announced its ambition of becoming “Asia’s Walt Disney.”
CarrieSoft said it will make every effort to launch an IPO by the end of 2019.
In addition to the content creating firm, a fintech security company Aton postponed its planned IPO to September.
Koreacenter, an e-commerce firm which got a preliminary approval June 27 from the Korea Exchange (KRX) for its planned IPO, has also remained reluctant to file its registration statement with the securities exchange operator.
Their decisions are regarded as measures to avoid joining the rapidly falling stock market.
Most newly listed small- and medium-sized enterprises on the Kosdaq market have faced huge drops in their stock prices recently.
On Aug. 13, 10 of the 15 companies that were listed on the secondary market saw closing prices lower than their initial offering prices.
“As Japan removed Korea from its whitelist of preferred trade partner countries July 2 and the U.S.-China trade dispute continues, the domestic stock market has faced a huge drop,” SK Securities analyst Lee So-joong said.
“Companies which will be listed in August will also face a slump in their stock prices, unless the trade issue gets resolved at least partially.”