EcoPro Materials' Kospi debut draws investors for short-term gains

Shares in EcoPro Materials Co., South Korean battery materials maker EcoPro Group’s unit that went public on Nov. 17, are skyrocketing as retail investors flock to the stock on expectations of short-term profits. 

The Kospi-listed firm’s market cap reached 8.5 trillion won ($6.5 billion) on Monday, ranking 43th on the main exchange, based on its share price that jumped 25.7% to finish at 124,600 won.

The market cap on Monday is 3.4 times the equity value before its listing. 

The uptrend is driven by individual investors, while institutional investors and foreigners are selling the stocks. Retail investors have bought a net 222.4 billion won worth of EcoPro Materials shares for the seven trading days until Nov. 27.

During the same period, institutional investors sold a net of 144.3 billion won and foreigners divested a net of 88.4 billion won.

Retail investors on a buying spree are in hopes of a significant jump in the newly listed shares, according to market insiders. Its affiliates EcoPro BM Co. and EcoPro Co. are the two top firms on the junior Kosdaq in terms of market cap, with not much possibility of a dramatic rise in share prices, according to market watchers.

EcoPro Materials will attract more individual investors expecting that the stock will be included in the Kospi 200 Index, which add a newly listed firm that retains the top 50 market cap on a daily average for the first 15 trading days since going public.

The share price could be beyond the firm’s fair value, banking sources say. EcoPro Materials posted 6.9 billion won in operating losses for the third quarter and is forecasting additional losses in the fourth quarter amid falling mineral prices and slowing demand for electric vehicles.

Meanwhile, local brokerages are restricting retail investors’ buying spree of EcoPro Materials stocks. Seoul-based KB Securities Co. and NH Securities Co. have adjusted the deposit for stock purchases to 100%, banning the investors from purchasing the stocks on credit.

Write to A-Young Yoon at youngmoney@hankyung.com

Jihyun Kim edited this article.