Value context and insight. lkm@koreatimes.co.kr
Credit loans surge more than 3.5 trillion won in just 2 days
SK bioscience CEO Ahn Jae-yong
By Lee Kyung-min
By Lee Kyung-min
Credit loans surged by over 3.5 trillion won ($3 billion) in a span of only two days this week, driven by increased borrowing by retail investors for subscriptions of SK bioscience shares, data showed Friday.
The sharp jump was also explained in part by financial authorities' moves to tighten lending rules to be measured by debt service ratio (DSR), as part of efforts to curb snowballing household debt. The ratio is calculated based on outstanding mortgage balance plus interest on non-mortgage borrowing to be paid, divided by the borrower's annual salary. The Financial Services Commission (FSC) plans to maintain the ratio under 40 percent, a drastic reduction from the current 70 percent.
SK bioscience CI
Data from the country's top five commercial lenders ― KB Kookmin, Shinhan, Hana, Woori and NH NongHyup ― showed that they had a combined 139.9 trillion won in outstanding credit loans as of Wednesday, up 3.5 trillion won from 136.4 trillion won on Monday. The explosive two-day increase is comparable to the steepest previous monthly increase of 4 trillion in August 2020. Tuesday saw an increase of 424.8 billion won, but the figure jumped nearly eight-fold the following day to 3.12 trillion won.
The borrowed money made its way into the initial public offering (IPO) involving shares of the biopharmaceutical subsidiary of SK Group, with the two-day subscription drawing a record high of 63.6 trillion won worth of investments. Over 14.15 trillion won was drawn Tuesday, and the following day ended up drawing an amount 3.5 times greater.
Underpinning the IPO craze are a slew of windfall gains from previous stock-market listings, notably involving Big Hit Entertainment, an entertainment agency representing Korea's pop sensation BTS, Kakao Games, an online game developer affiliated with Kakao Corp, and SK Biopharm, another biopharmaceutical subsidiary of SK Group.
Investors could in theory see a 160 percent one-day gain on the day of the stock listing, if the shares skyrocket 30 percent ― the maximum daily increase ― after doubling in value from the initially offered price at the beginning of the trading session. The profit can soar another 30 percent the following trading day if the craze is sustained, a possibility just as likely as a drop of 30 percent.
Holders of SK bioscience shares are hoping for the best-case scenario, in which case their initially offered per-share price of 65,000 won can spike to 169,000 won, netting 104,000 won in a one-day gain.
Holders of Big Hit Entertainment shares reported a one-day gain of 160 percent on the day of the listing, Oct. 15, 2020, but the price dropped to below 270,000 won, the initially offered price.
But owners of Kakao Games and SK Biopharm shares both netted 160 percent gains on the day of their respective listings, and the shares soared 30 percent for two consecutive days and three consecutive days, respectively.