More than 5 trillion won (US$4.52 billion) drained out of the country’s money market funds (MMFs) earlier this week, data showed Friday, as investors used it for deposit money to subscribe to Cheil Industries Inc.’s IPO (initial public offering) stocks.
The net asset value of MMFs stood at 90.5 trillion won as of Tuesday, down 5.66 trillion won from the previous day, according to data compiled by the Korea Financial Investment Association (KOFIA). The change in the figure marks the largest day-to-day slump since KOFIA began collecting such data in 2006.
The two-day stock pre-orders for Cheil Industries, the de facto holding company of South Korea’s top conglomerate Samsung Group scheduled to go public later this month, had started on Wednesday.
A money market fund is a pool of money that is mostly invested in short-dated bonds, commercial papers and certificates of deposit, and usually generates an average return of 2 percent.
Cash management accounts (CMAs) held a total of 45.28 trillion won as of Tuesday, down 1.24 trillion won from the 46.52 trillion won registered a day earlier. CMAs are a type of accounts that allows the account holder to trade equities while earning interests on cash balances.
Cheil Industries plans to sell 28.75 million of its shares on the local stock market with an IPO price of 53,000 won each. Some 20 percent of the shares were available for subscription.
The company’s listing is expected to be the third-largest IPO ever in the country, and investors bet a record-breaking 30.06 billion won in deposit money during the pre-order period. Stock orders were oversubscribed nearly 195 times.
Market watchers say that companies awaiting their IPOs are seen as profitable investment options for many after share prices of several newly-listed firms soared, rendering profits hard to come by amid low bank deposit rates and a sluggish stock market.
IT services firm Samsung SDS, which made its public debut just last month, saw its share prices jump, closing at 320,000 won on Thursday, up 68.4 percent from its initial offering price of 190,000 won.
South Korean home appliance maker Cuckoo Electronics and BGF Retail, operator of a local convenience store chain, ended with
196,000 won and 76,000 won on Thursday, up 88.5 percent and 85.4 percent, respectively, compared to their initial offering price. (Yonhap)
