South Korean small-cap stocks, previously rumored to have connections to presidential hopefuls, showed severe fluctuations Monday, even after they publicly disclosed that they were not actually linked to politics at all.
While the main bourse Kospi inched up only 0.97 percent, stocks related to dark horse South Chungcheong Province Gov. An Hee-jung rallied on the news that a new opinion poll showed he has narrowed the gap with leading presidential hopeful Moon Jae-in, former chairman of the main opposition Democratic Party of Korea.
SG Choongbang, a car seat parts maker listed on Kospi, surged 15.84 percent Monday, continuing its big gains from Friday 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 with An. The company has not disclosed any statement on their relationship to date.
In contrast, Moon-related stocks tumbled after they denied having ties with him.
Barunson, a stationery maker, plunged 8.68 percent on Kosdaq and Wooridul Huebrain, a medical and precision device wholesaler, fell 11.85 percent on Kospi, after the two released a public disclosure to say that they were not related to Moon.
The stationery maker had been considered Moon-themed stock on rumors that a law firm in Busan, South Gyeongsang Province, which 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 Friday.
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 Friday.
By Kim Yoon-mi (email@example.com)