IPOs, rights offerings hit lowest level since 1997 crisis

The value of initial public offerings (IPOs) and rights offerings on the South Korean stock market this year hit the lowest level since the 1997 Asian financial crisis, according to industry data.

IPOs on the local stock market stood at 466.4 billion won ($434.5 million) so far this year, the lowest level since 1998 when they came to 300 billion won due to fallout from the 1997 crisis, according to data by the Financial Supervisory Service (FSS) and the Korea Exchange (KRX).

Rights offerings reached 1.65 trillion won so far this year, while they amounted at 13.9 trillion won in 1998.

The dismal performance in IPOs and rights offerings was attributable to the European fiscal crisis which disrupted efforts by local companies to raise money on the local equity market by selling new shares, market watchers said.

Earlier this year, some of South Korea's biggest companies like KDB Financial Group Inc., Mirae Asset Life Insurance Co. and Hyundai Oilbank Co. were forecast to list their shares on the Seoul bourse, but the moves were delayed due to a protracted global financial crisis.

However, next year is expected to give some financial leeway to companies that want to make their debut on the local stock market as there is a possibility of a recovery of the global economy, market watchers said.

Along with KDB Financial Group, Mirae Asset Life Insurance and Hyundai Oilbank, some unlisted local companies including Hyundai-Rotem Co., SK Lubricants Co. and Samsung SDS Co. plan to list their shares on the local market next year.

"The size of South Korean IPOs are expected to reach between 2.5 trillion won and 3.5 trillion won next year," said Lee Jae-mahn, an analyst at Tongyang Securities Co. (Yonhap)