[비즈한국] As the political season approaches, political theme stocks are experiencing wild fluctuations day after day. If the period surrounding the impeachment ruling of former President Yoon Suk-yeol saw the fortunes of "Yoon Suk-yeol theme stocks" and "Lee Jae-myung theme stocks" diverge, the focus has since shifted toward Sejong-related theme stocks, driven by the possibility of relocating the capital, and theme stocks associated with People Power Party primary candidates.
The listed companies that have jumped on this bandwagon are also smiling. Because their stock prices are soaring regardless of their actual performance, they do not even need to manage their share prices. Taking advantage of this opportunity, some company executives have sold their shares to realize profits worth billions of won. Although financial authorities have introduced measures such as strengthened monitoring, those in the capital market repeatedly warn that because there are "mastermind groups" behind these "political theme stock" trends, investors must be extremely cautious.
Sangji Construction023770 hits upper limit for 10 consecutive trading days
Sangji Construction, which recently emerged as the "leader" of Lee Jae-myung theme stocks, was even described as having created a new trend in political theme stocks. Sangji Construction's stock price hit the upper limit for 10 consecutive trading days from the 2nd to the 17th. On the 18th, it soared to the upper limit during intraday trading, pushing the stock price—which had hovered between 2,000 and 3,000 won for the past two years—up to 54,000 won.
The reason its stock price surged nearly 18-fold in just half a month is its new affiliation as a "theme stock" for Democratic Party candidate Lee Jae-myung. This is because a former outside director who has since left the company was once listed on Lee Jae-myung’s campaign camp during the previous presidential election.
By the end of April, "Sejong theme stocks" took that spot. As of the 28th, while Sangji Construction's price fell to the 25,000 won range—more than 50% down from its peak—stocks like Gyeryong Construction013580, headquartered in South Chungcheong Province, and Sung Shin Cement004980, a cement producer and distributor holding land in Sejong City, surged. Gyeryong Construction closed at 12,700 won on the 3rd, the day before the impeachment ruling, but traded at a high of 31,750 won on the 23rd, 20 days later. That is a surge of more than 2.5 times. Sung Shin Cement also saw its stock price, which closed at 6,750 won on April 2nd, jump 2.5 times to 15,560 won by the 22nd.
Hong Joon-pyo, Han Duck-soo, and other PPP theme stocks also active
Theme stocks for former Daegu Mayor Hong Joon-pyo and acting Prime Minister Han Duck-soo, who is rumored to be running for office, are also gaining momentum. Gyeongnam Steel039240 saw its stock price rise nearly twofold after being classified as a theme stock due to Chairman Choi Choong-kyung's history of attending various events while Hong was serving as South Gyeongsang Province Governor. TS Corporation001790 was linked as a theme stock solely because the late Chairman Sul Won-bong was a classmate of Acting PM Han at Kyunggi High School (63rd class). Its stock, which was in the 2,700 won range before the impeachment, is now trading in the 4,000 won range.
Companies bundled into these themes are smiling. Cho Jung-il, CEO of Kona I and the largest shareholder of the company linked to candidate Lee Jae-myung, sold 4.5 billion won worth of shares (a 0.79% stake) on the open market between the 3rd and 9th of this month. By doing so, he avoided the mandatory requirement to report in advance if selling 1% of total issued shares or more than 5 billion won worth, leading to widespread criticism that it was a "trick."
An outside director of a listed company caught up in a political theme stock remarked, "From the owner's perspective, being listed as a theme stock means there is absolutely nothing to lose. You don't have to manage the stock price, and if you need money and want to take out a bank loan using shares as collateral, it becomes much more advantageous. Since the company's value has risen on its own, there are likely many more who enjoy this."
In fact, Sangji Construction, whose stock price soared, is utilizing this as an opportunity to raise capital by significantly expanding its paid-in capital increase scale beyond its original plan. On the 24th, Sangji Construction issued a correction filing stating that it was increasing its paid-in capital increase from 20 billion won to 91.4 billion won. The final issue price is 22,850 won per share, which is more than 10 times higher than its 2,000–3,000 won price range before the surge.
There are 'masterminds' behind the theme stocks...
The problem is that there are "masterminds" separate from the companies involved in this process. They buy billions of won worth of shares in advance, orchestrate a surge, and then spread rumors of a "theme stock." The Korea Exchange announced plans to strengthen monitoring of political theme stocks ahead of the presidential election, and the Financial Supervisory Service is currently operating a special task force for political theme stocks; however, concerns remain in the market that these masterminds will be "impossible to catch."
A source in the CB (convertible bond) investment industry tipped off, "While traditional stock manipulation cases—where companies are acquired and positive news is leaked—inevitably expose the truth, the method of profiting by riding the wave of political theme stocks leaves no names exposed. It seems to be even more rampant because there is no need to actually create positive news. If you look closely, you can see that certain companies have been consistently cited as theme stocks for years, just swapping out the names of politicians or political events. You can assume that 'masterminds' are continuously embedded in those places."