April 25, 2024

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[THE INVESTOR] South Korean small-cap stocks that were previously rumored to have connections to presidential hopefuls, showed severe fluctuations on March 13, even after announcing that they had no political links.

While the main bourse Kospi inched rose 0.97 percent, stocks thought to be related to South Chungcheong Province Gov. An Hee-jung, rallied on the news that he has narrowed the gap in with the highest-polling candidate Moon Jae-in, the former chairman of the main opposition Democratic Party of Korea. 

SG Choongbang, a car seat parts maker listed on the Kospi, surged 15.84 percent on March 13, continuing its big gains from March 10 when it closed with the daily limit of a 29.9 percent gain on expectations that the Constitutional Court would uphold the impeachment of former President Park Geun-hye. 

The company’s CEO Lee Eui-beom had been rumored to be close to An. Due to such speculation, the company officially announced on Feb. 16 in a regulatory disclosure that “the rumor that the CEO and the South Chungcheong governor are close is not true.”

Another “An-themed” stock is BG T&A, a wireless communications equipment maker, which jumped 6.73 percent on Kosdaq. The company’s CEO Lim Hak-kyu attended Korea University at the same time as An. The company has not disclosed any statement on their relationship.

In contrast, Moon-related stocks tumbled after they denied having ties with him.

Barunson, a stationery maker, plunged 8.68 percent on the Kosdaq and Wooridul Huebrain, a medical and precision device wholesaler, fell 11.85 percent on the Kospi, after the two released public disclosures to say that they had no connection to Moon.

The stationery maker had been considered a Moon-themed stock based on rumors that a law firm in Busan that Moon had worked for in the past, was a legal adviser for Barunson.

“We do not have a business relevance with the former Chairman Moon Jae-in. The news (on ties with Moon) has no fact that can affect our company’s stock price and trade volume,” Barunson said in a statement on March 10.

Stocks related to another presidential candidate Ahn Cheol-soo, former co-chairman of the minor opposition People’s Party, gained. 

Ahnlab, an antivirus program maker in which former CEO Ahn is the biggest shareholder, went up 2.4 percent to close at 67,900 won. 

Analysts declined to comment on politics-related stocks, citing the sensitivity of the issue.

Meanwhile, the Financial Supervisory Service and the Korea Exchange have selected 150 politics-themed stocks and vowed to closely monitor them to prevent any illegal stock trading prior to an early presidential election, the FSC said.

Under the law, South Korea needs to elect a president within 60 days after the Constitutional Court’s ousting of former President Park on March 10.  

By Kim Yoon-mi/The Korea Herald (yoonmi@heraldcorp.com)