Only a month after delisting standards were tightened, it turned out that nearly 1 in 10 domestically listed corporations fell short of the market capitalization threshold. With the market cap floor set to rise again next year, analysis showed that, based on current valuations, 479 corporations would not meet the standard.
On the 11th, Leaders Index, a corporate analysis institute, said that as of the end of last month it examined 2,578 domestically listed corporations, including 833 on the KOSPI and 1,745 on the KOSDAQ, and found that 192 corporations, or 7.4% of the total, had an average July market capitalization below the maintenance standard.
From last month, the market capitalization requirement to maintain a listing was raised to 30 billion won for the KOSPI and 20 billion won for the KOSDAQ. Applying this, 152 on the KOSDAQ, or 8.7% of the total, and 40 on the KOSPI, or 4.8%, fell short. As many as 88 corporations recorded market caps below the threshold for 30 consecutive trading days recently.
Next year, the standards will get stricter. The market cap floor will rise to 50 billion won for the KOSPI and 30 billion won for the KOSDAQ. Applying this to last month's average market caps, 479 corporations (18.6%) would fall short. On the KOSDAQ, 367, or 21.0% of the total, amounted to roughly 1 in 5. On the KOSPI, 112 (13.4%) did not meet the standard.
A considerable number of corporations also moved closer to delisting risk based on share price criteria. So-called "penny stocks," with an average closing price below 1,000 won last month, totaled 200, including 156 on the KOSDAQ and 44 on the KOSPI. If the common stock closing price stays below 1,000 won for 30 consecutive trading days, the company is designated as an issue under management, and if it still fails to recover the price standard for a certain period thereafter, it can become subject to delisting.
Standards related to financial soundness and disclosures were also tightened. From last month, full capital impairment on a semiannual basis was included as grounds for a substantive review of listing eligibility. The substantive review threshold for disclosure violations was also lowered to 10 demerit points from 15 accumulated over the past year. Based on business reports at the end of last year, there were 12 corporations with full capital impairment and 38 with a capital impairment ratio of 50% or more. It was found that 16 corporations had disclosure demerits of 10 points or more over the past year.
By industry, the service sector had the most corporations falling short of the market cap standard, with 38, followed by IT and electronics with 36 and household goods with 30. In the household goods sector, 16.9% of the 177 total fell below the standard, the highest share by proportion.
A Leaders Index official said, "If stock prices do not recover in the second half of this year or market caps are not raised through capital increases such as paid-in offerings, the number of corporations exposed to the risk of designation as issues under management could rise further along with next year's tougher standards."