The label of the South Korean boy band BTS is celebrating a robust debut within the “actually sizzling” IPO market
SINGAPORE – Shares in Big Hit Entertainment, the music label owned by K-pop superstars BTS, rose as they made their market debut in South Korea on Thursday.
Big Hit Entertainment's stock opened Thursday at 270,000 Korean won (about $ 236) per share, according to Refinitiv Eikon. That was double the share's issue price of 135,000 Korean won per share. Stocks extended their gains after opening before weakening. The first day of trading was more than 90% above the issue price.
South Korea's entertainment sector is going "global," Daniel Yoo, director of global investment at Yuanta Securities Korea, told CNBC's "Squawk Box Asia" on Thursday.
If you look at the entire IPO market, it's really, really hot.
Yuanta Securities Korea
"We believe the entertainment industry will be a very important industry for Korea to invest in," said Yoo.
Still, the analyst admitted that Big Hit Entertainment's current valuation "may be too expensive" as its current reliance on South Korean seven-piece boy band BTS is "very high".
South Korea's "hot" IPO market
Big Hit Entertainment's market debut was due to other blockbuster IPOs like SK Biopharmaceuticals and Kakao Games, which also made big leaps on the first day of trading.
"If you look at the entire IPO market, it's really, really hot," said Yoo. Most investors in previous public listings like SK Biopharmaceuticals "got between 100 and 200% return on the pre-subscription if they can get the shares," he added.
Part of this is due to the "enormous liquidity" observed in the South Korean markets.
The Bank of Korea currently has policy rates at an all-time low at a time when major central banks around the world cut interest rates to support financial markets during the coronavirus pandemic.