Money’s a hit for BTS in S Korean IPO frenzy

Korean stock exchangeIt may not have started out about the money, but the seven members of BTS, South Korea’s phenomenally successful  K-pop group, could be multi-millionaires, by then end of October after their label Big Hit Entertainment goes public. They probably won’t be the only ones, as demand for new listings coming onto the Korean Exchange (KRX) rages unabated among both institutional and retail investors.
It is not just devoted BTS fans that are ploughing money into shares. The South Korean IPO market is set to have its best year since 2017; so far in 2020, 67 companies have raised $2.4bn – and that is without the BTS label.
Analysts are attributing what currently looks like a V-shaped recovery to a combination of the country’s private investors’ traditional appetite for risky investments and the fact that, with interest rates so low, equities offer a better rate of return than savings accounts. In July, SK Biopharmaceuticals managed to raise $794m, and was quickly followed by Kakao Games which, in the process of raising  $323m, attracted orders that were a record 1,500 times more than the stock available.
Kakao GamesMore of the same is expected from Big Hit Entertainment, and the sectoral activities of these three companies in quest — biopharmaceuticals, gaming and entertainment — are indicative of a shift away from hardware manufacturers producing computer chips, ships and cars, to content creators.
Stock markets tend to live or die by investor confidence and, judging by the success of these IPOs, the South Koreans must have plenty to be confident about. Part of their optimism springs from the country’s relative success in implementing the lessons it learned  from the 2002-03 Sars epidemic.This is turn has instilled some resilience into the economy; the latest projections from the OECD have the South Korean economy contracting at just 1% over the course of the year, second only to China among the world’s major economies.