As the financial authorities promoting value-up policies in the domestic stock market strengthen the requirements for delisting, the threshold for corporations entering the stock market has also increased. This is interpreted as the Korea Exchange conducting listing reviews with stricter criteria than before.
According to the Korea Exchange on the 12th, there are 12 corporations that withdrew their preliminary listing reviews this year (from January 1 to March 10). During the same period last year, 5 corporations withdrew their preliminary listing reviews.
Corporations planning to transfer their listing from the KOSDAQ market to the KOSPI market, including ECOPRO BM, Youngkwang YKMC, REMEDI, REDNVIA, ARRNN, AIMMO, Merlot Lab, and others, have voluntarily withdrawn their preliminary reviews. Binggrae also suddenly withdrew its plans for a spin-off and re-listing scheduled for May this year.
Industry insiders interpret that the financial authorities seeking to resolve the Korea discount (the undervaluation of the Korean stock market) and promote value-up policies are raising the threshold from the listing review stage.
Corporations preparing for an initial public offering (IPO) to attract external investment funds apply for preliminary listing reviews at the Korea Exchange. They can enter the stock market through reviews, but many corporations often withdraw their preliminary reviews if they believe it will be difficult to obtain approval.
It seems that the financial authorities' strengthening of the exit requirements for poor-performing corporations in the stock market also influences corporate decision-making. The delisting requirements for the KOSPI market have been strengthened from below 5 billion won in sales to below 30 billion won, while the KOSDAQ delisting requirements have been raised from below 3 billion won to below 10 billion won.
For example, the annual sales of MTICS BIO, a developer of innovative antifungal new drugs that was considering going public, is only 14 million won. Corporations find themselves needing to grow in size before going through the listing process to avoid being delisted immediately after listing.
A source from the financial investment industry noted, "As problems have arisen with some listed companies that entered the stock market through existing technology special listings, the preliminary review process has become more stringent," adding, "An increasing number of corporations have judged that it is better to receive preliminary reviews after achieving profitability."
Meanwhile, the number of corporations that received preliminary listing review approval from the Korea Exchange this year has also decreased by nearly half. There were 22 corporations that received approval by early March last year, but this year, only 11 have received it. The number of corporations listed on the domestic stock market this year is 18 (including SPACs), which is fewer than 23 last year.
In this regard, the Korea Exchange explained that the large number of corporations applying for preliminary listing reviews at the end of last year has led to an increase in the number of companies withdrawing their reviews. A representative from the Korea Exchange stated, "We are thoroughly examining the preliminary reviews at any given time," adding, "We are not assessing with any particular trend in mind."