South Korea’s Kakao Games soars 30% in market debut, hitting daily limit

SINGAPORE — South Korea’s Kakao Games surged in their Thursday market debut on the Kosdaq, more than doubling from their listing price shortly after trading began.

Kakao Games’ shares started trading at 48,000 Korean won (about $40.48) apiece, twice the issue price of 24,000 won. ($20.24) They briefly surged to hit the daily permissible limit of 30%, last sitting at 62,400 won ($52.63) per share.

Meanwhile, parent company Kakao Corp. also saw its stock get a slight boost as it advanced around 0.9%.

The initial public offering (IPO) brought in about 384 billion Korean won (approx. $323.7 million) for Kakao Games, according to local news agency Yonhap. Prior to its market debut, Kakao Games reportedly set a new record for the country’s IPO subscription rate.

EY’s Ringo Choi told CNBC’s “Squawk Box Asia” that the coronavirus pandemic, which has “really changed the economy,” could be a factor behind enthusiasm for Kakao Games.

“A lot of people are staying at home and, also, they sometimes will play games,” said Choi, who is Asia-Pacific IPO leader at EY.

Coupled with “more confidence” in the video game sector and South Korea being one of the largest markets in the space, Choi said it was “reasonable” for Kakao Games to be “so hot at the moment.”

Beyond Kakao Games, Yum China also made its debut in Hong Kong on Thursday.

Choi said that companies are still choosing to debut because they “really need to have high liquidity” in a time of unprecedented economic uncertainty stemming from the coronavirus pandemic and U.S.-China tensions.

“It is reasonable to believe that most of the (companies) want to have more cash on hand,” he said.

This would also allow them to have a higher chance of buying out “good companies” that may have run into liquidity problems, at a lower price than before, he added.

“That’s why I think that a lot of (companies) will … continue to raise capital if the market can stand for it,” Choi said.