South Korea’s financial regulator will remove hurdles for initial public offerings on the country’s stock market in a bid to invigorate a sector that has been on a downward spiral, sources said Friday.
The Financial Services Commission will unveil a plan next week to revive the IPO market, which is expected to include measures on enhancing the independence of KOSDAQ, South Korea’s secondary bourse, reviewing stock listing regulations and promoting venture-focused KONEX market, according to the sources. The regulator will also ease the screening process for companies that seek to become publicly trade enterprises, they said.
More and more companies that are qualified to be listed are choosing not to do so, discouraged by years of slump in the local equities market.
“Companies are worried that they would not be able to raise enough money through IPO and that the listing would turn out to be disappointment,” said Hwang Se-woon from the Korea Capital Market Institute.
During the booming years, IPOs gave local businesses chances to raise capital and cash out their investments. Records for 2010 showed that 98 firms raised 10.9 trillion won ($10.5 billion) through IPO.
However, the total money raised by 40 companies last year fell to 1.4 trillion won. (Yonhap)