SKIET shares lose vitality after Kospi market debut

SK ie technology, a battery materials subsidiary of refinery and battery firm SK Innovation, rose on its market debut on the South Korean main board Tuesday, but lost value over the trading day, despite rosy market forecasts. 

As soon as the opening bell rang, shares of SKIET started off at 210,000 won ($187.64), doubling its initial public offering price, but closed at 26.43 percent down from their opening price, at 154,500 won. On the first day of trading, the company’s market capitalization came at some 11.01 trillion won, turning it into the Kospi’s 36th most-valued stock, excluding preferred stock.

Shares of SK Innovation also fell by 3.58 percent to 269,000 won, while its preferred stock also retreated 4.59 percent to 187,000 won, at the closing bell.

The market debut of SKIET was widely seen as the last blockbuster IPO deal before a ban is imposed on multiple applications for new share subscriptions. Small domestic traders seeking profit before the window of opportunity closes deposited record amounts of cash -- nearly 81 trillion won -- during a two-day retail tranche last month.

While only 15 percent of the battery materials maker’s issued stock, or some 10.72 million shares, were tradable on the first day of trading, foreign investors dragged down the stock price by offloading a net 306.2 billion won.

Daily trading volume of SK Innovation’s battery materials unit marked some 11.7 million shares worth more than 1.9 trillion won. It was the second most traded stock after market bellwether Samsung Electronics with nearly 2.35 trillion won.

With investors rushing to place massive buy and sell orders for SKIET shares, trading of some Kospi-listed stocks was delayed, due to the electronic trading system exceeding its processing limit.

Meanwhile, local brokerage houses suggested target prices of SKIET below 200,000 won Tuesday. Yuanta Securities Korea expected a band of 100,000-160,000 won per share, while Hana Financial Investment and Meritz Securities predicted the upper-end target band to 148,000 won and 180,000 won per share, respectively.

“SKIET shares are likely to face high volatility up to six months after listing. Through the process of investors’ massive buying and selling, the stock will eventually adjust to its proper value,” Hwang Gyu-won, an analyst at Yuanta Securities Korea wrote in a report.

By Jie Ye-eun (yeeun@heraldcorp.com)