Blockbuster Korean IPOs of 2021 turn into major upsets for retailers from epic fall

South Korean retail investors retaining last year’s blockbuster initial public offering stocks like Kakao Pay, KakaoBank, and SK ie technology would be kicking themselves at the sight of their epic fall.

Kakao Pay Wednesday traded at 47,450 won ($34.77), nearly halved from last year’s IPO price of 90,000 won. KakaoBank was at 20,050 won, losing nearly 80 percent from peak and 49 percent from its IPO of 39,000 won. SK ie technology has fallen to 52,700 won, off 77.83 percent from its peak, and Krafton at 202,000 won, more than halved from its expensive IPO of 498,000 won.

The debutants were shunned amid unfavorable macroeconomic conditions from rising interest rates and growing concerns about global economic recession.

Foreigners and institutional investors were first to shed growth stocks, dumping 2.32 trillion won worth during the first nine months of the year.

Those went public last year were mainly growth stocks that normally are popular in bullish market and lush liquidity. But they become less attractive when excessive liquidity dries up from aggressive monetary tightening, leading investors to dump mainly growth stocks.

Retailers would have been primarily burned from the downfall.

According to NH Investment & Securities’ survey on stock account holders as of the end of September, no one gained from their investment in SK ie technology. Only 0.01 percent of investors in Kakao Pay and KakaoBank and 0.13 percent in Krafton recouped some.

Employees with money in stock ownership programs also would be watching losses swell, according to NH Investment & Securities. No employee of SK ie technology gained from their holdings of IPO stocks. In the case of KakaoBank and Kakao Pay, the loss per employee amounts to 270.08 million won and 166.32 million won, respectively.

Brokerage firms see the growth stocks stay on the losing track for the time being as their earnings consensus has revised down. KakaoBank is vulnerable due to its high ratio of household loans, while Kakao Pay has yet to make a profit. It reported a loss of 12.5 billion won in the second quarter.

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