S.Korean Digital Bank Kakao Soars To Biggest Lender In Epic Trading Debut

Digital bank, Kakao Bank, S. Korea, stock market

Digital lender Kakao Bank’s stock market debut in South Korea rocketed out of the starting gate with share prices up 62 percent at 11:10 a.m. in Seoul on Friday (Aug. 6), according to multiple media reports.

At one point, Kakao Bank’s shares on the Korea Stock Exchange (KRX) soared almost 80 percent over the opening price, with a market capitalization topping $28 billion, and positioning the digital-only bank as the biggest lender by market value, per reports. 

See also: KakaoBank Corp Shares Priced For $2.2B IPO

Kakao Bank is the first financial institution without a physical location to go public in Asia, Reuters reported, citing a source close to the deal. The bank’s unique digital-only status on the KRX triggered a rally in a trading space that recently pushed Chinese stocks to the wayside due to regulatory interference. 

South Korean stock market trading often has soaring opening days, per Bloomberg data across the past year, with almost 50 percent of the 113 firms listed up 30 percent when first-day trading closed. Kakao Bank’s affiliate Kakao Games, for example, was up 160 percent over the initial public offering (IPO) price.

See also: Korean Digital Lender Kakao Bank Sets Sights On Raising $2.3B In IPO

“The heavy demand was due to local institutions not getting as much as they wanted during bookbuilding and foreign firms with money earmarked for fintech investments. On top of that, it seems some funds have been rerouted here due to the cancellation of Ant Financial’s IPO and other major offerings from China amid the recent tech crackdown,” Kim Ji-young, analyst at Kyobo Securities, told Reuters.

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Founded in 2016, Kakao Bank turned a profit in under 24 months and has a user base topping 13 million. 

“One million customer(s) opened the mobile bank account with Kakao Bank in just five days over launch. Based on these figures, don’t you think Kakao Bank is certainly different from the incumbent banks?” Kakao Bank CEO Yun Ho-young told CNBC.