A slew of Chinese companies are knocking on the doors of the South Korean IPO market despite growing friction between Seoul and Beijing over the deployment of U.S. Terminal High Altitude Area Defense (THAAD) antimissile system on Korean soil.

A total of 26 Chinese companies are currently preparing to go public in Korea, according to 14 Korean securities companies polled by Maeil Business Newspaper on Thursday. Of them, 15 are aiming to float an IPO within this year. Up to 24 Chinese companies, including nine Chinese that are already on track to go for an IPO in Korea and awaiting their best time, would debut on the Korean stock exchange this year. This is four times larger than the number of Chinese firms that went public in Korea last year.

This is also quiet contrast to what has happened to many other Korean industries suffering from Seoul’s decision to deploy THAAD system. In particular, the Korean tourism sector has seen a significant drop in the number of Chinese tourists visiting Korea amid growing antagonism against Korea due to the deployment decision. Many Korean firms doing business in China are also challenged by boycott by Chinese people, too.

According to market analysts, the steep rise in new IPOs from Chinese companies represents the Korean stock market is more attractive than those in China or in Japan. It generally takes longer to go public in China than in Korea, and regulatory procedures in Japan are more cumbersome and restrictive compared to those in Korea.

Types of businesses of Chinese companies contemplating their IPOs in Korea are not limited to manufacturing, either. They have become more diverse than before, ranging from healthcare firms to finance and food service providers. It is a sea change from the period of 2012 and 2015 when there was no single case of an IPO by Chinese companies in Korea due to the fallout of accounting frauds by China Gaoxian Fibre Fabric Holdings that debut on the country’s secondary Kosdaq market in 2011. The company was eventually kicked out of the market in October 2013.

Pearlescent pigment maker China Color Ray and organic fertilizer supplier Green Source whose lead manager is Shinhan Investment may be the first two Chinese companies to go public in Korea this year. Preliminary reviews of their IPOs are underway and results are soon to come.

NH Investment & Securities and KB Securities are stepping up efforts to attract Chinese companies. The two stock brokers signed IPO management service contracts with four Chinese companies, respectively.

By Song Gwang-sup

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]