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KRX sends warning on speculative transactions as NFT frenzy shakes up market

A promotional photo of NCSoft's new MMORPG release Lineage W (NCSoft)
A promotional photo of NCSoft's new MMORPG release Lineage W (NCSoft)
The Korea Exchange, the sole stock market operator of Korea, placed gaming company NCSoft under an investment caution on Tuesday, a day after an unnamed individual investor was disclosed to have sold 530,000 shares, or a 2.4 percent stake, in the company.

The news came as a surprise to market watchers, as the same day trader was seen buying over 703,000 shares and sold 211,000 shares on Thursday -- when NCSoft shares hit the price ceiling at 786,000 won ($666.50) apiece from the previous closing price of 605,000 won.

The combined daily transaction of the single trader is estimated to be at least 300 billion won.

Under Korea‘s market rule, a listed company is issued an investment caution when a certain single securities account transacts over 2 percent of the total listed shares, and the listed stocks’ price rises or falls by more than 5 percent from the previous trading day.

NCSoft‘s stocks on Friday and on Monday were subject to KRX’s investment caution -- the mildest level of market supervision which does not involve a penalty -- after those transactions that took place on Thursday and on Monday. KRX is investigating the possibility of speculative or unfair trade of the listed shares.

The disclosures filed with the Korea Exchange did not specify at which quoted price the transactions were made.

In the meantime, NCSoft‘s share price was on a rollercoaster ride. After hitting a price ceiling Thursday, NCSoft shares fell 16 percent over the two trading days until Monday. On Tuesday, the shares were trading nearly 7 percent higher than Monday‘s closing price. NCSoft is trading on the KRX’s main board Kospi.

This reflects the nonfungible token hype in Korea among day traders, and the influence of an announcement over a listed company‘s foray into nonfungible token business that has yet to crystalize.

NCSoft was one of the companies to ride on the blockchain bandwagon, using the blockchain technology to allow players of its massively multiplayer online role-playing games to use NFTs as in-game currency.

This is in line with a series of announcements of Korean gaming firms to open the NFTs Exchange. The latest were Gamevil, which earlier this year announced a plan to acquire a stake in Korea’s cryptocurrency exchange operator Coinone, as well as Kakao Games. The companies seek to develop C2X -- NFTs that can be used as game money -- by next year.

Some Korean gaming firms are proving to be successfull in their NFT adoption. Wemade‘s blockchain-powered ’play-to-earn‘ MMORPG Mir 4, was released in 170 countries in August. Since the release, Wemade’s stock price rose nearly sixfold.

By Son Ji-hyoung (consnow@heraldcorp.com)
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