Securities authorities began enforcing a "market normalization" policy on July 1 that allows them to designate stocks trading below 1,000 won per share as issues under administrative notice and eventually delist them. Some mid-sized companies are pursuing share consolidations and other measures to prop up their share prices. [Yonhap]
Securities authorities began enforcing a "market normalization" policy on July 1 that allows them to designate stocks trading below 1,000 won per share as issues under administrative notice and eventually delist them. Some mid-sized companies are pursuing share consolidations and other measures to prop up their share prices. [Yonhap]

Stocks below 1,000 won for 30 trading days face administrative notice — delisting follows if price stays depressed for 90 more

Enex, Daekyo, Hankuk Paper MFG, i-Scream Edu among companies hovering near the 1,000-won threshold

Small- and mid-caps left behind as Samsung Electronics, SK hynix drive the rally; market cap pressure also mounts

As a semiconductor-led rally lifts the broader market, small- and mid-sized listed companies in traditional industries face mounting pressure to avoid being pushed out as penny stocks. While investor flows concentrate on large-cap semiconductor names such as Samsung Electronics and SK hynix, companies in furniture, education and paper are struggling to keep their share prices above 1,000 won or are dangerously close to falling below market capitalization thresholds.

New delisting rules for stocks trading below 1,000 won per share took effect July 1, according to industry sources. Under the rules, a stock that trades below 1,000 won for 30 consecutive trading days is designated an issue under administrative notice. If the stock then fails to recover above 1,000 won for 45 consecutive trading days within the following 90 trading days, it becomes subject to final delisting. The rules also cover stocks that undergo a share consolidation but still trade below their post-consolidation par value.

A number of companies are already at risk of triggering the administrative-notice countdown if current share prices persist. Furniture maker Enex closed at 930 won on Thursday, below the 1,000-won threshold. Its market cap stands at around 11 billion won ($7.31 million), well short of the 30 billion won minimum required for companies listed on the main bourse. The company faces simultaneous pressure on both the share price and market cap fronts.

Education company Daekyo is also trading below 1,000 won per share, closing at 962 won on Thursday. The company disclosed on July 1 that it would consolidate its shares, raising the par value from 500 won to 1,000 won. An extraordinary shareholders' meeting is scheduled for Aug. 3, and trading is set to resume Sept. 10 after a suspension period. "We plan to continuously enhance our long-term corporate value by strengthening our core business competitiveness, improving profitability and expanding communication with investors," a Daekyo official said.

Paper companies are also under strain. Hankuk Paper MFG has recently been trading in the 500-won range. Hanchang Paper's share price, in the mid-2,000-won range, does not trigger the penny-stock rule, but its market cap has been hovering in the low 30 billion won range — meaning even a modest price decline could push it below the main-bourse threshold.

Kosdaq-listed education company i-Scream Edu is also considered at risk. The stock has recently been trading in the high 800-won range, and its market cap remains in the 10 billion won range. The Kosdaq market cap threshold was raised to 20 billion won on July 1, leaving i-Scream Edu under simultaneous pressure from a sub-1,000-won share price and a market cap below the new minimum.

Cement and building materials company Dongyang has turned to a share consolidation to defend the 1,000-won line. Shareholders approved the consolidation at an extraordinary general meeting last month, raising the par value from 500 won to 1,000 won per share. Dongyang's share price had been stuck in the 500-won range before the consolidation. The key question is whether the stock can trade stably above par value once trading resumes.

Hansol HomeDeco is also on the borderline. Its share price is above 1,000 won, but its market cap hovers around 30 billion won. On the main bourse, a company that falls below the market cap threshold for 30 consecutive trading days is placed under administrative notice, and failure to meet recovery requirements can trigger delisting proceedings.

At some companies where delisting appears increasingly likely, a sense of resignation has set in. "There is no way to artificially push up the share price. Of course we need to strengthen our core business and broaden communication with shareholders, but the share price is so low that internally there is more of a feeling of 'there's nothing we can do' than any real sense of urgency," an official at one such company said.


hong@heraldcorp.com