Foreign Listed Firms Fare Poorly
By Oh Young-jin
Staff Reporter
A handful of foreign companies listed on the Korean stock exchange were faring poorly, setting back its plan to join the ranks of leading global bourses.
According to the Korea Exchange, an entity that came as a result of the merger of the Korea Stock Exchange, Kosdaq and the futures bourse in 2005, all three foreign firms listed since August last year showed their stock prices hugging the bottom.
The share price of 3nod Digital, a Chinese manufacture of multi-media speakers and peripherals, dropped to 2,665 won on June 5, after hitting highs for 11 consecutive days to reach 15,850 won. Its initial public offering (IPO) on the tech-heavy Kosdaq was 2,500 won per share. 3nod shares were the subject of a stock market scuttlebutt that the prices were inflated.
Hua Feng Group, a Chinese textile company, which was the first to be listed on the main bourse, saw its stock price go up to the daily limit on its listing day November 26, but has since continued to drop, with its shares priced at 2,170 won last week, approximately one third of its high of 6,300.
Cowell Holdings, which has an optic electronics company as a subsidiary, started trading at 1,900 won on Jan. 29 and never surpassed its IPO price of 2,000 won. Its current price is a shade over 1,000 won.
Stock brokers attribute the dismal share prices of all three Chinese companies listed on the Korean bourses to a lack of transparency, believing they have not provided enough information to investors about performance.
On top of this, the Chinese companies in general are not doing well, which is combined with the setting of IPO prices above real values.
However, market watchers called for a wait-and-see attitude, citing corporate performance that is above average.
For the 2007 fiscal year, 3nod recorded 58.8 billion won in sales with operating profits at 7.5 billion won; Hua Feng was tallied at 90.4 billion won in sales and 15.3 billion won in operating profits, with Cowell showing numbers of 43.2 billion won and 4.6 billion won respectively.
``We fear that these lackluster performances by the first batch of foreign companies listed on our stock markets may ward off prospective foreign investors and put a damper on those who are considering becoming listed,'' a stock exchange official was quoted by Yonhap News as saying.