In the KOSPI market, the stock prices of corporations with a price-to-book ratio (PBR) below 0.2 are showing strength. Earlier, Lee Jae-myung, the presidential candidate of the Democratic Party of Korea, mentioned that corporations with a PBR of 0.1 to 0.2 should be quickly liquidated, and it seems that investors expecting the target corporations to work on boosting their stock prices have been drawn in.
Taekwang Industrial's stock was traded at 833,000 won in the KOSPI market on the afternoon of the 9th. The stock price rose by 5.98% (47,000 won) from the previous day.
It is interpreted that the candidate's proposal to aim for a 5,000 level in the KOSPI and criticism of corporations with a PBR below 1 has stimulated investor sentiment. A PBR below 1 means that the current stock price is cheaper than if the company sold all of its assets and shut down. Taekwang Industrial has a PBR of 0.17.
The candidate met with an economic YouTuber the previous day and noted, "Looking at the current South Korean stock market, the average price-to-book ratio (PBR) is below 1, and some stocks are only a tenth of that, which I find hard to understand."
Taekwang Industrial's stock also rose by 7.16% (49,000 won) on the 22nd of last month. The candidate mentioned on the same day that, along with Yeosu Securities Association Chairman Seo Yoo-seok and 17 research center heads from securities companies, "Corporations with a PBR of 0.1 or 0.2 should be quickly liquidated, as there are too many stocks with little value."
Not only Taekwang Industrial but also most stocks with a PBR of 0.2 showed an upward trend on the 22nd of last month. Looking at the stock price rise during this period, YoungWire, which had a PBR of 0.14, soared by 32.49%, while Chonbang, also with a PBR of 0.14, increased by 11.26%.
Additionally, stocks with a PBR below 0.2, including DL, TY Holdings, Hyundai Steel, Dongbu Corporation, Dongil Steel, Sungchang Enterprise Holdings, LOTTE Chemical, and Hanwha Life, had price increases exceeding 5%. This was a significant difference compared to the KOSPI index rise of 1% during the same period.
However, stocks with low PBR values are also strongly influenced by political themes, so investors need to exercise caution. In the case of YoungWire, the representative's remarks triggered a surge on the 28th of last month, hitting the upper limit (the maximum daily price restriction), and it rose by 22.38% the day before, but today it is showing a decline in the 12% range.