Even with Sluggish Returns, Large Funds Flow into IPO Funds

Expectations for Major IPOs in the Second Half, Including KakaoBank

[Asia Economy Reporter Song Hwajeong] Although SK IE Technology, which had raised expectations, failed to achieve "ttasang" (opening price at twice the IPO price followed by hitting the upper limit), and the stock prices of IPO stocks have fallen short of expectations, funds continue to flow into IPO funds.

According to financial information provider FnGuide on the 27th, 731.4 billion KRW flowed into 135 IPO funds with assets under management of over 1 billion KRW in the past month. This is the second highest amount after ETFs (domestic bonds), which attracted 1.2363 trillion KRW among 46 theme funds classified by FnGuide. The inflow since the beginning of the year reached 3.311 trillion KRW.

Although funds are continuously flowing in, returns have not met expectations. The return of IPO funds in the past month recorded -0.62%. Recently listed IPO stocks have shown sluggish performance, with some even having their opening price below the IPO price on the first day, far from achieving "ttasang." Among the seven stocks listed this month, HPIO, CNC International, Sam CNS, and Jin System had opening prices below their IPO prices. In the case of HPIO, the IPO price was set at the lowest end of the price band (22,200 to 25,400 KRW). Most IPO prices this year have been set at the upper end or above the price band, making HPIO the first to be set at the lower end this year.

Although IPO stocks have shown sluggish performance this month, steady inflows into IPO funds seem to indicate that investors still hold a positive view of IPOs. Especially since large-scale IPOs are scheduled for the second half of the year, investor enthusiasm for IPO investments remains strong. KakaoBank, KakaoPay, Krafton, and Hyundai Engineering are scheduled to be listed in the second half of the year.

The ban on multiple subscriptions for IPO stocks starting next month is also considered one of the factors driving funds into IPO funds. IPO funds can participate in subscriptions as institutional investors. Previously, direct subscriptions were more advantageous than IPO funds due to equal allocation, but with the ban on multiple subscriptions, IPO funds are expected to emerge as an alternative for IPO investments. Na Seungdoo, a researcher at SK Securities, said, "With large-scale companies set to appear one after another, the IPO market will continue to be successful, but the variable is the ban on multiple subscriptions." He added, "Starting in June, with the enforcement of the ban on multiple IPO subscriptions, the enthusiasm in the IPO market is likely to cool down somewhat."