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* Korean IPOs $3.7 bln so far in 2017, world's third-highest
* Pipeline expected to include Jin Air, Kyobo Life, Celltrion
* New rules allow more companies to launch IPOs
* Korean currency, stock gains underscore investors' deal appetite
By Elzio Barreto and Joyce Lee
HONG KONG/SEOUL, May 4 (Reuters) - South Korea has emerged as an unusual hot spot for initial public offerings this year, shooting up to the third most-active market in the world despite political upheaval and tensions with its neighbours.
Investors have spent $3.7 billion in South Korea so far in 2017, behind U.S. IPOs of $13.5 billion and Chinese listings of $11.1 billion, Thomson Reuters data shows.
IPOs of $974 million from ING Life Insurance Korea and $2.3 billion from mobile games maker Netmarble Games Corp last week have been the driving force behind the Korean IPO splurge.
The pipeline is set to continue in coming months with budget airline Jin Air Co Ltd, Kyobo Life Insurance and Celltrion Healthcare among those expected to go public.
"Most of the Korean corporates as well as investors are more comfortable with the recent political issues, so that they're ready to do something," said June Won, head of capital market origination Korea at Citigroup, which helped manage the Netmarble IPO.
"Investors are taking it in stride. If you look at the Korean currency, which is getting stronger, and bond trading numbers, all these indicate Korea is quite stable even though there is some noise," he said, referring to Korean tensions.
The impeachment and ousting from office of President Park Geun-hye cleared the way for an election next week and put an end to a political crisis that had lasted for months.
Investors are also seeing through tensions with North Korea as the United States, its allies and China, increase pressure on Pyongyang to rein in its nuclear weapons ambitions. They see conflict as unlikely.
Healthy exports and stronger-than-expected GDP figures for the first quarter have boosted confidence in the economy.
That has translated into stronger financial markets. The won is the second-best performing major Asian currency against the U.S. dollar in 2017, up 6.8 percent. Stocks are up about 9.5 percent and at six-year highs.
South Korea's IPO market this year is more than seven times bigger than at the same time last year. It's ranking is all the more surprising because the global market is also much stronger, with IPOs so far this year of $49.8 billion more than double the year-earlier level.
ING Life debuts in Seoul on May 11 and Netmarble the following day. Jin Air said last week it wanted to list by the end of 2017, but it did not disclose how much it aims to raise.
Celltrion Healthcare, the marketing affiliate of biosimilar drugs firm Celltrion Inc, plans to raise up to 1 trillion won ($886 million) in an IPO.
Kyobo Life, South Korea's third-largest life insurer by assets, said in March it plans to raise funds to boost its capital, but gave no fundraising target, local media said. ING Life is about a third of the size of Kyobo Life by assets.
Even Hotel Lotte Co Ltd, which shelved a $4.5 billion IPO last year amid an investigation of parent Lotte Group from prosecutors, could revive the listing in 2017.
Bankers said deal activity is also being boosted by new rules introduced at the start of the year that allow high-growth startups yet to be profitable to seek a public listing. Only companies with a profit record were permitted to list previously.
South Korea's largest mobile-commerce company Coupang could be among tech companies set to go public under the new rules, local media reports have said. Repeated calls to a Coupang spokesman went unanswered.
The new rules also put underwriters on the line if newly listed companies tumble, demanding they guarantee that they will buy back the shares if they fall more than 10 percent within three months of listing.
"The new rules more or less let the market decide how to list a company," said Alpha Asset Management fund manager CJ Heo.
"With more companies able to be listed, and a variety of valuation and other techniques, sooner or later IPO advisors will... begin new ways of bookbuilding and listing, which means both new risk and new opportunities for investors in South Korea." ($1=1,128.4000 won) (Reporting by Elzio Barreto in HONG KONG and Joyce Lee in SEOUL: editing by Neil Fullick)