As the initial public offering (IPO) of Elon Musk's space company SpaceX approaches, Korea's investment market is heating up, but a decoupling phenomenon is emerging as share prices of domestic space and aviation-related stocks and exchange-traded funds (ETFs) remain on a downward trend.
According to the financial investment industry on the 9th, on the 8th, the second tranche of SpaceX IPO subscriptions that Mirae Asset Securities recruited from Korean investors sold out two minutes after opening at 8:30 a.m. On the 5th, the first tranche, sized at $300 million, closed in one minute, marking back-to-back blockbuster demand.
However, the share prices of corporations in the space and aviation value chain listed on the domestic stock market are sluggish.
Since June, Korea's representative space and aviation stocks have been tumbling in droves. Intellian Technologies, a satellite antenna manufacturer, closed at 133,100 won on May 29 but fell to 100,400 won on the 8th of this month, plunging 24.57%.
Satrec Initiative (-17.19%) and Asia Pacific Satellite (-22.94%), both satellite system corporations, also traced steep declines. Hanwha Aerospace likewise slipped 14.24% over the same period, barely clinging to the 1 million won level.
As individual stock prices collapsed, returns of domestic space and aviation ETFs also cratered.
PLUS Space and Aviation from Hanwha Asset Management, which holds domestic space, aviation, and defense corporations, fell 19.11% from 42,680 won on May 29 to 34,525 won on the 8th of this month. TIGER K-Defense & Space ETF from Mirae Asset Global Investments also fell 17.17% from 43,185 won to 35,770 won.
In the securities community, some view profit-taking after a short-term surge in space and defense-related stocks and sector-wide corrections, along with the Blue Origin accident, as among the factors dampening investor sentiment.
On the 28th of last month (local time), Blue Origin, led by Amazon founder Jeff Bezos, suffered an accident in which its large rocket New Glenn exploded during a ground hot-fire test. The accident fueled concerns that, on top of the loss of the launchpad, the timetable for the National Aeronautics and Space Administration (NASA) lunar exploration value chain (Artemis program) would face disruptions.
Park U-yeol, a senior researcher at Shinhan Investment & Securities, said, "On May 29, as Blue Origin's New Glenn rocket exploded, investor sentiment toward the space industry was partially damaged."
Choi Bo-won, a researcher at Korea Investment & Securities Co., said, "While expectations for growth in the space industry are spreading ahead of SpaceX's listing, in this field a single small issue can cause a project to fail," adding, "It could take time for a full recovery."
The securities industry still sees the long-term growth potential of the space industry as intact. However, given the nature of the industry, where unexpected technical risks such as rocket launch failures or satellite deployment delays occur frequently, short-term volatility is inevitable.
Choi advised, "Even among space-related stocks, the trend of share prices diverging based on earnings may intensify, so caution is warranted."