Increased speculative trading in the early stages of listings exposed in the contracting speculation market

Although the SPAC market within the financial sector has contracted, speculative trading during the initial listing phase has been found to increase. The Financial Supervisory Service emphasizes the fundamental nature of SPACs as “shell companies” that do not conduct actual business. Their stock prices tend to fluctuate wildly during the early days of listing, which is unrelated to the company’s actual value and is driven by speculation. This phenomenon has occurred against this background.

Originally, SPACs were paper companies established by securities firms to raise investor funds for the purpose of indirectly listing non-public companies through mergers and acquisitions. Their main function is to help companies enter the stock market via M&A. However, recently, both the number of new listings and the amount of public fundraising have decreased, indicating a market contraction. Last year, the public fundraising amount for SPACs was 270.4 billion won, about 30% less than the previous year, and their share of the overall public fundraising market has also declined significantly.

M&A success rates have also worsened markedly. The number of cases where SPACs successfully completed mergers last year dropped to 38.5%, while there were 24 delistings due to failed mergers. Against this backdrop, only the stock price volatility during the initial listing period has shown an expanding trend. Analysts believe that although the initial public offering price typically starts around 2,000 won, there are large fluctuations on the listing day, with prices swinging sharply, dominated by speculative trading.

The Financial Supervisory Service emphasizes that SPAC stock prices should normally remain close to the original IPO price. The recent extreme fluctuations are considered abnormal. Additionally, due to the continued low stock prices after mergers, the agency suggests it is necessary to operate SPACs under a regulatory environment similar to that of regular public offerings. To this end, the Financial Supervisory Service plans to study future institutional improvements and will periodically alert investors to注意事项.

While the trend in the SPAC market shows an increase in speculative trading in the short term, strengthening regulations and supervision by financial authorities are expected to establish a more stable financing channel in the long run. Relevant parties particularly emphasize that investors need to fully understand the unique characteristics of SPACs and exercise caution when participating.