HL Genomics fell 31.21% on its first trading day on the KOSDAQ market, closing at 14,790 won compared to its IPO price of 21,500 won, according to Korea Exchange data from the 24th. The decline occurred despite the company attracting over 4 trillion won in retail subscription deposits during its IPO process. The sharp drop was attributed to institutional investors' reluctance toward long-term holdings, with the mandatory holding commitment ratio reaching only 1.9% of requested quantity, allowing institutions to sell shares immediately upon listing. This performance reflects a broader trend in Korean stocks, where approximately 82% of companies listed in the recent 3 months are currently trading below their IPO prices.
HL Genomics IPO Process Attracted 4.6 Trillion Won in Subscriptions
HL Genomics, an active pharmaceutical ingredient (API) manufacturer, achieved partial success during its IPO process. During the institutional demand forecasting conducted from the 2nd to the 8th of this month, investors concentrated their bids at the upper end of the hoped-for offering price band of 18,500 to 21,500 won. A total of 98.5% of participating institutions submitted prices at or above the upper band limit, resulting in the IPO price being set at 21,500 won. The subsequent retail subscription phase generated a competition ratio of 667.23 to 1, collecting approximately 4.6 trillion won in subscription deposits.
The stock opened at 25,500 won (1.2 times the IPO price) immediately after market opening and maintained gains of around 4% in early trading. However, the upward momentum diminished to 1-2% before the stock turned negative and fell below the IPO price.
Institutional Investors Committed to Hold Only 1.9% of Allocated Shares
Despite strong retail interest, institutional investors demonstrated low commitment to long-term investment. The mandatory holding commitment ratio—representing institutions' pledges not to sell shares for a specified period—reached only 1.9% based on requested quantity. Of the total 1.3745409 billion shares from participating institutions, 98.1% (1.3483008 billion shares) carried no mandatory holding commitments. Analysts attribute the first-day price weakness to institutions that did not commit to long-term holdings releasing their allocated shares into the market immediately.
Nine of Eleven Recent IPOs Trade Below Offering Price
Korean stocks from recent IPOs have experienced widespread price instability. According to Korea Exchange statistics, among 11 companies that listed in the recent 3 months, only 2 companies currently trade above their IPO prices: Cosmo Robotics (up 138.50% versus IPO price) and Makinarocks (up 61.67%). The remaining 9 companies all trade below their offering prices, including Peace Piece Studio (down 74.65%) and StradVision (down 73.88%). Market observers characterize this as an unusual phenomenon, considering that companies typically discount their fair value—based on metrics such as price-to-earnings ratio—by approximately 25% during the IPO process.
FAQ
What happened to HL Genomics stocks on the first trading day?
HL Genomics fell 31.21% on its first trading day on the KOSDAQ market, closing at 14,790 won compared to its IPO price of 21,500 won on the 24th, according to Korea Exchange data.
Why did institutional investors not commit to holding HL Genomics shares long-term?
The mandatory holding commitment ratio among institutional investors was only 1.9% of requested quantity, meaning 98.1% of institutional allocations (1.3483008 billion shares out of 1.3745409 billion total shares) carried no commitment to hold for a specified period, allowing immediate selling upon listing.
How many recent Korean IPOs are trading below their offering prices?
Of 11 companies that listed on Korean stock markets in the recent 3 months, 9 companies (approximately 82%) currently trade below their IPO prices, with only Cosmo Robotics and Makinarocks trading above their offering prices.
