Poor Debuts Cause Search For Buyers of Falling Stocks

Woojin Selex Co., an injection molding equipment maker, made a humiliating debut on the Kosdaq market last Thursday. Its share price nose-dived by the daily limit of 12 percent.

Following the plunge, Kyobo Securities Co., which lead-managed Woojin's initial public offering, or IPO, has begun to make a market for the shares to prevent further drops in the stock price.

When a newly-listed company's share price is expected to fall to below 80 percent of the IPO price within a month of the debut, IPO managers make a market by placing buy orders for the shares at 80 percent of the IPO price.

CJ Food System, which went public on the same day, also saw its share price sink. The stock fell to below 91 percent of the initial price just two days after it began trading.

With the Kosdaq market in doldrums, the stock prices of a number of debut firms have dropped steeply, and their managers have begun market-making steps. That is in stark contrast with last year, when stocks of newly-listed firms' kept up long rallies.

Local securities firms said Sunday that they have made markets for eight firms that went public this year, including Woojin.

Tong Yang Securities Co. said the eight companies' IPO prices were overvalued by 28 percent, on average, than their analyst-determined company valuations. But Hanhwa Securities analysts attributed the drop to the slumping market rather than to high valuations.

by Chung Jeh-won