Korean Gaming Stock Jumps 160% in Trading Debut After Retail Frenzy
(Bloomberg) -- A South Korean gaming stock surged 160% from its initial public offering price in a trading debut in Seoul, as investors bet on industries that benefit from social distancing in coronavirus-induced lockdowns.
Shares of Kakao Games Corp, a unit of Kakao Corp that operates the nation’s most-popular messaging app Kakao Talk, surged by a daily limit to 62,400 won, propelling its market capitalization to 4.5 trillion won ($3.7 billion). Individual investors submitted orders for 1,524 times the amount of stock made available to them, according to SK Securities in a note. Local media reported that the retail subscription for Kakao Games was a record in the country.
The investors’ exuberance for the offering is the latest example of insatiable demand for IPOs related to technology and health-care sectors that are the best positioned to gain from homeworking. The sentiment is also boosted by the liquidity injected by central banks to stave off the economic damage of the pandemic. In Hong Kong a slew of biotech share sales have attracted hordes of retail investors keen to capitalize on a health-care boom.
The annual sales increase for Kakao Games in the past three years averaged 57% and the company is seeking to develop more games by itself, rather than focusing on releasing those developed by other makers, according to note from Hanwha Investment & Securities. Sales of 2020 will likely jump 36.9% given the popularity of its new game Guardian Tales, the note says.
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