Gmarket - Yahoo vs. eBay in South Korea

 As I reported this morning, South Korean online retailer Gmarket, in which Yahoo Inc. (YHOO) has a 10% stake, raised $139 million in a Nasdaq IPO today, a higher than expected pricing (they were hoping for $100 million).

Due to high broadband penetration, the S.Korean market is expected to grow by more than 20% a year to $20 billion by 2010. Yahoo! Inc bought a 10% stake in Gmarket, giving it a foothold in the Asian market.

While Gmarket with its 8.9 million registered users (at end of May) is eBay's rival in the Asian market, margins are expected to remain tight as more competitors enter the market in hopes to gain market share.  Fierce competition could affect both companies' margin as commissions would probably not be raised.

An analyst with Hundai Securities thinks Gmarket's expensive pricing is due to investors expectation that Gmarket could "overtake eBay in South Korea as the top player as early as this year," if it hasn't already according to one measure of unique clicks (17.2 million unique visitors for Gmarket in May, compared to eBay's 17.1).

Gmarket will list on Nasdaq under the "GMKT" ticker and will begin trading in the U.S. later on Thursday. The ticker isn't easy to pronounce but Gmarket does roll nicely, so I wonder how their stock will perform in the next few days according to that Princeton study that correlates initial stock performance with the company name and ticker symbol.

While Yahoo and eBay cooperate in the US, they seem to be ferocious rivals in the Asian market and while this could be a positive move for Yahoo! Inc, eBay Inc.'s troubles in Asia just keep mounting as this latest one doesn't bode well for growth going forward.