LG CNS Debuts Weakly on Seoul Exchange Amid Skepticism Over IPOs
South Korea's LG CNS Co. experienced a sluggish start on its debut on the Seoul trading market, with shares falling despite a strong IPO raking in 1.2 trillion won ($821 million).
LG Group's technology-services arm plummeted by 8.6% to 56,600 won per share on Wednesday, marking a stark contrast to its IPO pricing of 61,900 won, which was the upper end of the offered range.
The debut highlights growing skepticism among investors towards IPOs as a path to financial gains in Seoul. While first-day surges have been common for Korean listings, most have underperformed in recent months and now trade below their IPO prices.
"IPO stocks have been disappointing lately," said Kim Dojoon, CEO of Zian Investment Management. "We likely need to regulate the IPO market as it appears to be overheated."
Out of the 35 companies that have gone public in Korea over the past three months, only a quarter are currently trading above their IPO value.
South Korean authorities recently announced plans to reform the IPO market to encourage long-term investment.
Despite expectations that LG CNS, a competitor to Samsung SDS Co., could benefit from a market recovery, the stock's underperformance may be due to the lack of liquidity in the Korean market.