As the domestic stock market shows a rapid increase after the launch of the new government, the financial authorities have decided to continue monitoring political theme stocks by operating a special task force until the end of next month.
According to authorities on the 8th, the Financial Supervisory Service plans to maintain a special task force that has been expanded before the early presidential election until the end of July, continuing to monitor political and policy theme stocks suspected of unfair trading. The service is also receiving tips from insiders, and rewards up to 3 billion won will be given to those who report unfair trading activities.
Not all stocks that experience significant price volatility will be subject to investigation. Stocks that show abnormal price surges linked to specific politicians or policies, or those where large shareholders conduct mass sell-offs, will be closely examined, especially those with large-scale convertible bonds (CB) conversions.
An FSS official noted, "We are examining the relationship between rumors and trading, focusing on cases where complaints and reports were received during the election period and the stocks sold by major shareholders," adding, "We will continue to monitor stocks that experience abnormal surges even after the election." The FSS stated that it would operate a surveillance and investigation system in cooperation with related organizations such as the Korea Exchange.
According to authorities, most stocks that are surging as political theme stocks are limit companies with very low profitability and weak financial structures. However, there are often cases where investment funds flock in anticipation of short-term surges. The proportion of individual investors in political theme stocks is 87%, much higher than the market average of 67%. Overheated stock prices often lead to significant crashes.
After this presidential election, political theme stocks that surged during the election period have all plummeted. Stocks classified as 'Lee Jae-myung theme stocks,' such as Sangji Construction and Orient Precision Industries, and those that surged as 'Kim Moon-soo theme stocks,' such as Pyung Hwa Holdings and Pyunghwa Industrial, have fallen by around 70% compared to their peak.
While investors are being cautioned, the trend of theme stocks showing strength continues even after the presidential election. After the launch of the new government, the prices of securities and holding companies have surged significantly, and small and medium-sized stocks have also surged, as benefits are expected from policies related to renewable energy, local currencies, and inter-Korean cooperation.