[IPO Restructuring 2 Months]②Short-term Traders Exit, Stock Price That Briefly Rose Returns to Original Level

Double speculation demand quickly disappears on first day of listing
"Price discovery function, the purpose of system introduction, is working" 평가

Since the implementation of the expanded price limit on the first day of listing, concerns about IPO price bubbles and the risk of stock price volatility have increased. However, speculative demand has also rapidly disappeared, leading to an assessment that the price discovery function of newly listed stocks is working to some extent. It is expected that once the transitional period of the system change passes and it stabilizes, the original purpose of introducing the price limit will be further realized. However, during this process, as the selection of promising IPO stocks is expected to intensify, stock price volatility is likely to continue until the system fully settles.

Day Trading Speculation on the First Day of Listing Quickly Disappears

According to the Korea Exchange on the 28th, among the eight newly listed companies in July after the IPO system change was applied on June 26, five are currently trading below their IPO price. This indicates that the overheated atmosphere following the expansion of the IPO price fluctuation range has calmed down.

The market expects that the initially chaotic atmosphere following the system reform will gradually stabilize and lead to price stabilization effects. Kwangyoung Oh, a researcher at Shin Young Securities, noted, "Although some IPO stocks showed very high price volatility on the first day of listing, it is judged that the price discovery function, which is the purpose of the system introduction, is operating."

The financial investment industry views the expanded price limit policy as beneficial in the long term because stock prices can find their proper levels relatively quickly. If this system had not been implemented, companies like Secusen or Phil Energy might have gone straight to 'ttasang' (opening at twice the IPO price and hitting the upper price limit), attracting follow-up buying at the upper limit and causing prolonged overheating of stock prices. A securities firm official explained, "With the expanded price limit, stock prices soared to nearly four times the IPO price during the day, triggering immediate profit-taking sales, which ultimately stabilized the stock price within a week of listing."

Experts particularly emphasize that although short-term speculative demand surged on the first day due to the expanded price limit, most of it disappears on the same day. A trader said, "Unlike the IPO boom in 2021, it is impressive that newly listed stocks usually find their market price within a week after listing." It was also noted that although there is no opening price limit causing extreme price volatility on the first day, the market is becoming similar to the U.S. stock market, where prices quickly find their market value. Jongkyung Choi, a researcher at Heungkuk Securities, said, "Initial confusion after the system implementation is inevitable. However, ultimately, the expansion of the price limit leads to early formation of an appropriate equilibrium price, enabling price stability in the IPO market."

Contributing to Market Stabilization... Caution Advised for Investment in the Short Term

There is also a view that IPO bubbles and extreme price volatility will be resolved through the process of selecting promising IPO stocks. Jongseon Park, a researcher at Eugene Investment & Securities, said, "It seems that some stocks were confirmed at high IPO prices due to concentrated interest," adding, "This phenomenon is expected to gradually resolve over time along with stock selection."

In the financial investment industry, voices supporting the continuation of the expanded price limit policy dominate. Seonjae Heo, a researcher at SK Securities, said, "The measure to expand the price limit on the first day of listing is evaluated as successful," adding, "It helped quickly find the appropriate corporate value according to market logic." Sewoon Hwang, a research fellow at the Korea Capital Market Institute, also said, "Expanding the price limit allows more information to be reflected in prices within a day," and "It is a reasonable policy that enables various information about stocks to be quickly incorporated into prices." A Korea Exchange official also diagnosed, "Although volatility increased due to the focus on 'ttattabl' (double-double) contrary to the original purpose of the system, the market is gradually normalizing over time."

However, caution in investment was still urged. Researcher Jongkyung Choi emphasized, "The rapid price surge of SPACs and the expanded price limit have raised the expected returns on the first day of new listings, which is concerning," adding, "This signals an overheated phase where even if investors buy IPO stocks at high prices, they can achieve high returns as long as they secure the volume." He stressed, "The rise in IPO prices ultimately leads to a decline in stock price returns, which burdens investors."