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South Korea's Kakao Video games rise 30% on market debut and hit every day restrict

In 2015, passengers use smartphones in a subway in Seoul, South Korea.

Woohae Cho / Bloomberg | Bloomberg | Getty Images

SINGAPORE – South Korea's Kakao Games rose on their market debut on Thursday on the Kosdaq, more than doubling compared to the quoted price shortly after the start of trading.

Kakao Games shares traded at Korean won 48,000 (approximately $ 40.48) apiece, twice the issue price of won 24,000. (USD 20.24) They briefly hit the 30% daily limit, most recently at 62,400 won (USD 52.63) per share.

The parent company Kakao Corp. also saw its shares rise slightly as they rose around 0.9% in afternoon trading.

The IPO brought in around 384 billion Korean won (about $ 323.7 million) for Kakao Games, according to local news agency Yonhap. Prior to its market debut, Kakao Games is said to have set a new record for the country's IPO subscription rate.

EY's Ringo Choi told CNBC's "Squawk Box Asia" that the coronavirus pandemic, which has "really changed the economy," could be a factor behind the craze for Kakao Games.

"A lot of people stay home and sometimes play games," said Choi, EY's Asia Pacific director of IPOs.

Coupled with "more confidence" in the video game sector and South Korea as one of the largest markets in the field, Choi said it was "reasonable" that Kakao Games was "so hot right now".

Why companies are still listing

In addition to the Cocoa Games, Yum China also made its debut in Hong Kong on Thursday.

Choi said companies are still choosing to debut because they "really need high levels of liquidity" at a time of unprecedented economic uncertainty due to the coronavirus pandemic and US-China tension.

"It is reasonable to believe that most (companies) want more cash," he said.

It would also give them a higher chance of buying out "good companies" that may have encountered liquidity problems at a lower price than before, he added.

"So I think many (companies) … will continue to raise capital if the market can stand it," said Choi.

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