The Financial Supervisory Service announced that it would operate a concentrated reporting period related to political theme stocks starting from the 1st of this month. It plans to expand the special task force that has been in operation since December last year to closely examine the potential for unfair transactions.
The FSS noted on the 1st, "Recently, as the political situation has rapidly changed, the price volatility of political theme stocks is increasing," and added, "There are concerns about unfair transactions and investor losses," urging caution.
Since December 1, the FSS has categorized and managed 60 stocks related to politicians or policies, designating them as political theme stocks when they are flagged as investment warning or higher among market alert items. The issue is that these stocks are surging in price based on mere rumors, regardless of their performance, increasing the likelihood of investor losses.
According to the FSS, the average total asset of political theme stocks is 12.8% and 49.7% of the average of the KOSPI and KOSDAQ markets, respectively, indicating that most of these assets are small and medium-sized stocks with low scale. More than half of them are in such poor condition that they cannot even pay interest with their operating profit, and the average operating profit margin is about 1%. Nevertheless, their value is overvalued by more than double compared to the market average.
The FSS stated, "Political theme stocks can fluctuate dramatically in price regardless of their intrinsic value such as corporate performance, so we hope investors will exercise caution," and warned that producing or disseminating false information or rumors via social media (SNS) could lead to punishment for unfair transactions.
To strengthen the crackdown on unfair transactions related to political theme stocks, the FSS will expand the special task force that has been operational since December. It also plans to operate a concentrated reporting period until July 31, when the presidential election concludes, to strengthen the response system.
The FSS expressed, "We hope you will actively report if you suspect unfair transaction allegations."