SEOUL (Reuters) – Big Hit Entertainment Co., the management label behind K-Pop Sensation BTS, made its debut with a bang, but its dramatic crash after a pop on the first day of trading prompted South Korean regulators to seek protective measures for mothers. And pop investors.
On the success of Korea’s first no. BTS’s management agency, which hit the Billboard music chart in September, went public in October as one of the hottest ads in town.
However, the entertainment agency’s listing has since been the subject of outcry from private investors, as many moved for a stock after a crash of more than 52% from a high of 351,000 won ($ 314.80), which hits on the first day of trading, October 15 has been.
The stock is now trading at 158,000 won per share, slightly above the market price of 135,000 won per share.
“I used money saved for my wedding to buy around 300,000 won and 50 million won ($ 44,842.65) worth of Big Hit stock. If I show receipts and file a petition, is there any way I can get the refund? “Wrote one of hundreds of investors who discussed options for stock repurchases at an investment forum on the local Naver portal.
South Korea’s IPO market is similar to a lottery. Retail investors can borrow as much as they can to subscribe to as many stocks as possible. However, since the orders massively exceed the number of shares made available to private investors, usually 20%, many only buy after the share has been listed.
Although BTS fans piled up when Big Hit went public, institutional investors were much less interested. Some large investors, including STIC Investment Inc and Mainstone LLC, sold large amounts of big hit stocks in the first week of trading, data from the Financial Supervisory Service revealed, sparking a soul-searching among Korean regulators.
“Due to the massive backlash from regulators over the Big Hit crash, one idea among officials is to add safety nets for retail investors by applying the mandatory holding period to a larger number of institutional investors,” said a Korean official Financial Investment Association, an industry organization that represents heavyweight institutional investors.
“But adding another layer of mandatory holding periods for large investors would be a mistake as it will seriously discourage those with big money from jumping in,” the official said, asking not to be named because of the sensitivity of the problem.
Government officials from the Financial Supervision Commission declined to comment.
In South Korea, regulations dictate that only the largest shareholder and related parties must hold shares for at least six months.
STIC and Mainstone did not have a mandatory holding period because they invested in Big Hit prior to book construction, a Korea Exchange official said.
“The bottom line is that regulators cannot prevent sell-offs. However, a revision of the IPOs could aim to extend the mandatory holding period while increasing the allocation shares for mom and pop investors, ”said Choi Yoo-juni, analyst at Shinhan Investment Securities.
($ 1 = 1.115.0100 Won)
Reporting by Cynthia Kim. Adaptation by Gerry Doyle
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