Foreign investors are flocking to Kakao Inc., South Korea`s leading messaging app operator, on brightened prospects of online banking business upon seeing heated response to K-Bank that began service as the country’s first internet-only bank this week two months ahead of Kakao Bank.

K Bank formed by a consortium of KT Corp., Woori Bank and 19 other companies opened more than 60,000 accounts on its first day in business on Monday, outperforming brick-and-mortar banks whose monthly electronic account openings stand at 12,000 on average.

Foreign investors bought roughly 1.15 million Kakao shares or 1.7 percent of total outstanding shares on a net basis on Tuesday, the biggest one-day purchasing of the stock in two years and half. Kakao Bank was cleared by financial authorities to start operation in June. Kakao closed Wednesday slightly up 0.23 percent at 85,900 won. Profit-taking by others brought down the shares Thursday, sending them 1.75 percent down at 84,400 won as of 1:40 p.m.

Foreign ownership levels of the stock now represent 24 percent, up from the 22 percent level of late last year. This is the highest foreign ownership level of Kakao since Sept. 2016. Their net purchasing totaled 79.3 billion won ($70 million) since Monday.

Kakao is also drawing attention for its IPO plan for subsidiaries. Since last year, Kakao has spun off mobile content, payment service, and artificial intelligence businesses as subsidiaries. Kakao’s equity stake in these companies could help increase the value of Kakao as Naver Corp. benefited by its mobile messenger subsidiary LINE Co. after the latter went public on the Nasdaq exchange last year. Kakao’s game development subsidiary Kakao Games is on track for IPO on the Kosdaq exchange next year.

Foreign investors are also interested in Kakao’s online-to-offline (O2O) business, which incorporates the digital and physical marketplaces by utilizing web-based markets and tools. The company’s car-hailing app service Kakao Taxi and chauffeur service Kakao Driver are yet to bring home money, but are expected to play a cash cow role once they are firmly anchored in the market.

Meanwhile, the investor frenzy for Naver will cool down as foreign ownership levels of Naver hit 61.37 percent, the highest since 2012. Naver shares continued a bullish run in the past year on foreign buying, but won’t have any more appeal until the internet company turns out real numbers from its new business like self-developed artificial intelligence-powered device. In Seoul trading Thursday, Naver shares were down 1.54 percent at 830,000 won.

By Hong Jang-won and Chung Woo-sung

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