As of August 13, the first step toward delisting penny stocks is set to begin, with 26 companies having dramatically escaped the threat of delisting. To avoid being designated as management items, a stock must close above 1000 won for just one day during a 30-trading-day period starting July 1. While these companies still face challenges such as falling short of market capitalization requirements, they have managed to grasp a lifeline to evade delisting.
According to the Financial Supervisory Service's electronic disclosure system, the strengthened delisting regulations that took effect on July 1 have led to public disclosures regarding 'management item designation concerns' and 'additional management item designation concerns' for penny stocks since August 5. Companies classified as penny stocks have been issuing these disclosures after their stock prices fell below 1000 won for 25 consecutive trading days since July 1. If these companies do not raise their stock prices above 1000 won by August 12, they will be designated as management items and face delisting if they fail to meet additional requirements (maintaining a price above 1000 won for 45 out of 90 trading days).
Some companies have narrowly escaped the delisting crisis. These include those that have recorded a closing price above 1000 won at least once since July 1 or have had their trading suspended due to stock consolidation. A total of 26 stocks from both the KOSPI and KOSDAQ markets fall into this category.
In the KOSPI market, CI Tech and DY have managed to hold onto their lifeline. CI Tech recorded a closing price of 1002 won on July 29, while DY reached 1063 won on July 10. In the KOSDAQ, eight companies have avoided the delisting threat, including Memelabity (1053 won on July 16), Sambo Industry (1160 won on July 30), Daesung Venture Capital (1045 won on July 31), Joyworks & Co. (1103 won on July 31), Abko (1000 won on July 21), Jarvis (1000 won on August 4), and Coasia CM (1000 won on August 5), all of which recorded prices above 1000 won for at least one day.
Many companies have also boarded the 'last train' to escape delisting, with stock prices exceeding 1000 won after the management item designation concerns were announced. In the KOSPI market, Daekyo and Sangsangin Securities have seen last-minute rebounds, while in the KOSDAQ, Essentec, Wisebuzz, Dasan Solueta, Nubo, and Lumens have also succeeded in their late-stage recoveries. Eight companies, including Cherry Buro and Kookyoung GM, temporarily halted trading due to stock consolidation, buying themselves some time. As of now, 33 companies remain at risk of being designated as management items.
However, analysts caution that escaping the penny stock designation does not guarantee safety. Starting in the second half of this year, the market capitalization thresholds for delisting will increase from 20 billion won to 30 billion won for the KOSPI and from 15 billion won to 20 billion won for the KOSDAQ. Currently, 19 companies have received public disclosures regarding management item designation concerns, including seven from the KOSPI and 12 from the KOSDAQ. Among them, Ontide, Moa Life Plus, E8, Our Enterprise, and Hyungji Global have fallen short of both penny stock and market capitalization requirements, increasing their burden to maintain listing.
As the exit of penny stocks and companies with insufficient market capitalization looms, there are calls to consider the recent volatility in the stock market. Eom Su-jin, a researcher at Hanwha Investment & Securities, noted in a recent report, "In this unprecedentedly volatile market with severe supply-demand imbalances, we need to reconsider whether it is appropriate to apply strict delisting criteria to small and mid-cap stocks," adding that small and mid-cap stocks have been sidelined regardless of their performance or fundamentals amid the extreme volatility and concentration in the semiconductor sector.
* This article has been translated by AI.
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