[Inside Chodong]Korean Investors Left Out of the Much-Anticipated Event

No IPO Allocation for Korea in SpaceX Listing
Disappointed Investors, and a Renewed 'Korea Passing' Debate
A Moment of Reckoning for Korea's Capital Markets

The much-anticipated event has come to a successful close—the story of SpaceX's listing. From the start of the year, expectations for SpaceX's initial public offering (IPO) fueled a wave of enthusiasm around the space theme. Touted as the largest IPO in history, it attracted global capital and made a successful debut on the stock market. However, domestic investors could only watch the much-hyped event from the sidelines, as they were not invited to participate.

This SpaceX IPO was especially anticipated by domestic investors, as, unlike previous blockbuster IPOs, an avenue for participation had opened. In the past, even when global giants went public with record-breaking IPOs, Korean investors could only look on from afar. These events were celebrations for major U.S. and local institutions, with no official channels for Korean investors to be allocated shares. This time, however, a major Korean securities firm joined the joint underwriting syndicate and was listed in the U.S. Securities and Exchange Commission (SEC) filings. Mirae Asset Securities, participating in the syndicate alongside more than 20 global investment banks (IBs), was initially expected to underwrite 2,314,815 shares of SpaceX Class A common stock. Based on this allocation, Mirae Asset Securities accepted subscription applications from professional and institutional investors, generating such strong interest that the allocation was sold out within one to two minutes. Asset managers also got involved—Korea Investment Trust Management planned to receive a portion of the subscription through Mirae Asset Securities and allocate it to its exchange-traded funds (ETFs) and other funds. As a result, Korean investors hoped to reap at least some of the benefits from what was dubbed the IPO of the century through public share subscriptions.

However, these expectations evaporated on the day of the listing. Goldman Sachs, the lead U.S. underwriter, completely cut the allocation for the Korean side just before the listing, leaving Mirae Asset Securities with zero shares in the end. Investors were left disappointed, Mirae Asset Securities lost face, and Korea Investment Trust Management, which had heavily promoted the inclusion of IPO shares in its funds, was left in an awkward position. The aftermath has been significant, with the Financial Supervisory Service launching an investigation.

This incident serves as a reminder to reflect on the standing of Korea's capital markets in the global financial arena. Despite the worldwide popularity of K-culture, the rise of K-semiconductors as key players in the age of artificial intelligence (AI), and the standout performance of the KOSPI among global stock markets this year, Korea's capital markets still have a long way to go, as highlighted by the resurfacing of the 'Korea passing' controversy.

In a sober light, this could be a turning point for Korea's capital markets. To survive in the global major leagues, structural improvements are necessary. Rather than resorting to short-term, showy marketing tactics, Korea must develop networks that enable it to negotiate with global lead managers on an equal footing and establish advanced risk management systems. Investors, too, must take this as an opportunity to recognize the structural risks inherent in overseas markets. By using the painful experience of the SpaceX incident as a catalyst for strengthening its fundamentals, Korea's capital markets and financial institutions can finally gain recognition on the global stage.

This content was produced with the assistance of AI translation services.