Lockup Expiries Free 109M Korean Shares at 52 Firms in November

A November supply test for Korea's smaller stocks

In November, South Korea's stock market will absorb another month of shares coming off mandatory lockups, and nearly all of the new supply lands on its riskiest board. The Korea Securities Depository (KSD) says holding restrictions on 109.23 million shares at 52 listed companies end during the month.1 Four companies on the main KOSPI board account for 2.71 million of those shares. The other 106.52 million belong to 48 companies on the tech-heavy KOSDAQ.1 That puts about 98% of the unlocked stock in small- and mid-cap KOSDAQ names. Analysts expect more price swings as a result, because the stock that could now be sold hangs over these companies.1

The total is not alarming in itself. What matters is how much of each company is being freed. For a handful of recently listed firms, the shares that become sellable this month are a large fraction of everything they have issued. That matters more than any market-wide figure.

The names carrying the most risk

Cochip faces the biggest single shock. On November 7, lockups end on 5,665,543 of its shares, equal to 65% of its total outstanding stock.1 Nobrand follows on November 23, when 8,436,424 shares, half its outstanding stock, become tradable. Synap Soft comes next on November 19, with 2,419,271 shares, or 48% of its total.1

Seven more KOSDAQ companies will see more than a fifth of their stock freed: Precision Biosensor, S-Chem and Nomus at 29% each, Airrane, Contec and Dotmill at 24%, and Sonix at 23%.1 On the KOSPI, the largest event is Samwha Electronics on November 20, when 2,263,085 shares, about 12% of its outstanding stock, come free. The other main-board releases are small: 240,000 shares of Pretty (1%), 183,317 shares of Citech (4%) and 28,347 shares of Taeyoung E&C.1

The reasons for the lockups also matter. KOSDAQ listing rules account for 68.48 million of November's shares. The Regulations on Issuance and Disclosure of Securities cover 40.48 million, and KOSPI listing rules cover 240,000.1 KOSDAQ's listing rules mainly bind controlling shareholders and other insiders after an IPO. The disclosure regulations typically cover shares issued in private placements and capital increases. That reading is supported by Chosunbiz's description of the system, which covers largest shareholders of companies that have gone through an IPO or a paid-in capital increase.14 In practice, much of November's supply comes from stock market debuts in roughly the past year, with the rest coming from fundraising after listing.

How the system works, and what the totals leave out

Under Korea's mandatory holding registration system, shares held by largest shareholders and certain institutions are recorded electronically at the KSD. They cannot be sold until the set period ends.1 The stated aim is to protect ordinary investors from a sudden flood of supply right after a listing or share issue.14 This is a legal requirement, which sets Korea apart from the United States. There, lockups are contractual and imposed by companies or their underwriters rather than by regulators.5

The KSD figures are not the full picture. In its coverage of the October release schedule, The Asia Business Daily noted that the depository's count excludes voluntary holding pledges. It also leaves out the holding commitments that institutional investors make during IPO allocation.18 So the 109 million figure most likely understates how much stock becomes eligible for sale in November. Some IPO allocations taken by institutions with one-month or three-month pledges will also come free outside the official count.

The Korean coverage agrees on the main numbers, though it has stumbled before. For October, Seoul Economic Daily, Chosunbiz and The Herald Business all reported 99.32 million shares across 34 companies.121416 One English-language report of the same data gave the total as 9,932,000 shares, and listed KOSDAQ's portion as 9.23 million instead of 92.3 million.18 That looks like a units mistake rather than a real disagreement. Still, it is a reminder to check depository data against more than one report. Company names also vary between translations. The same EV-charging firm appears as both Chaevi and Chaebi, and the same cosmetics maker as both BBIA and Ppia.1216

Reading the monthly trend

Placed next to earlier months, November's figure is moderate. June brought 303.85 million shares from 54 companies, led by large KOSPI releases at K Bank and KC Cottrell.15 September freed 229.48 million shares across 38 companies, 119.49 million of them on the KOSPI.1617 October dropped to 99.32 million.14 November's 109.23 million is a small rebound in volume but spread across many more companies: 52, up from 34.114

The mix has changed even more than the totals. Earlier this year, big main-board names such as K Bank accounted for a large share of the unlocked stock.1519 November's supply is almost all KOSDAQ, where companies are smaller and trading is thinner. In my reading, this makes November more dangerous at the level of individual stocks than its headline number suggests. A 65% release at a small KOSDAQ company can hit its share price much harder than a far larger block at a widely held KOSPI company.

October already showed the pattern. BBIA had 62% of its stock freed, and several equipment and materials makers had a third or more released.12 November continues that run of small listings releasing large stakes, with Cochip's 65% the steepest so far.

Why the overhang may matter less than the headline number

A freed share is not necessarily a sold share. In September, Korean analysts said actual selling depends heavily on who owns the stock.19 Controlling shareholders who want to keep control may hold on after restrictions end. Venture capital firms and other financial investors have more reason to sell, since their business is realizing returns.19 Analysts also advised looking beyond the number of shares to the likelihood that holders sell and to the stock's normal daily trading volume.19

The research points the same way. Studies of lockup expirations find small negative average returns, often around 1% to 3%, along with a lasting rise in trading volume. Results vary widely from one stock to another.59 Markets often price in a known date ahead of time, so weakness tends to show up before the expiry rather than on the day.4

Where risk is clearly higher is in companies trading below their IPO price. A Korea Times analysis of September's releases noted that newly freed stock sold into a falling market makes losses worse for existing shareholders. It pointed to Kbank, which was trading about a third below its 8,300-won offering price when 81.8 million of its shares were released.19 Osang Healthcare was a sharper case. It was offered at 20,000 won and closed at 7,000 won after 59% of its stock came free.19 For November, the useful screen is not only the percentage being freed but also where each company trades compared with its IPO valuation. The coverage does not report those price levels for Cochip, Nobrand or Synap Soft, and investors should check them themselves.

A policy shift lands in the same month

The timing matters for Korea's IPO pipeline as well. A cornerstone investor system takes effect on November 13. It sets aside part of each offering for institutions that agree to hold their shares for at least six months. Cornerstone investors can receive up to 20% of the IPO shares allocated to institutions on the KOSPI and up to 30% on the KOSDAQ. Half of each allocation is locked for six months, 30% for eight months and 20% for ten months. Regulators say the goal is to raise the share of medium- and long-term institutional holders and to make IPO pricing more rational.

In my view, this is the most important context for November's releases. The KOSDAQ overhang problem, in which large blocks come free shortly after a debut, is exactly what the cornerstone system is meant to soften. Its staggered schedule spreads institutional supply out instead of releasing it all at once. The effect will take time to appear, though. Companies that list under the new rules from mid-November will not reach their first cornerstone release until around May 2027. Until then, monthly KSD schedules like this one will keep putting heavy pressure on Korea's smaller listings.

The global backdrop

Korea's overhang worries are part of a wider wave of unlocks. In the United States, lockups tied to this year's crowded IPO calendar end through November and December. They include about 205 million Fervo Energy shares on November 9 and roughly 647 million Innio shares on December 1.2 SpaceX, whose record June listing raised $85.7 billion, has spread its insider releases over many months. The New York Times reported that the stock fell well below its $135 offering price ahead of the first release.10 India also faces a large run of lock-in expiries into January.8

Compared with those, 109 million Korean shares is a small amount. The lesson applies across markets, though: the size of each release relative to the company and its trading volume matters more than the total. For KOSDAQ investors in November, that means watching Cochip on the 7th, Synap Soft on the 19th and Nobrand on the 23rd.