Seoul mayoral election posters are displayed on a street in Seoul, May 27. Newsis
Shares linked to political figures moved largely downward and saw weak trading activity during this local election period, in contrast to previous election cycles when such stocks experienced sharp volatility, according to Korea Exchange data Wednesday.
Market analysts attributed the subdued performance to the recent KOSPI rally led by Samsung Electronics and SK hynix, as optimism over expanding artificial intelligence (AI) data center investment and an improving semiconductor outlook shifted investor focus toward major technology stocks.
Sampyo Cement and SJ Group, both regarded as stocks linked to ruling Democratic Party of Korea Seoul mayoral candidate Chong Won-o, fell 30 percent and 49 percent, respectively, over the past month as of Tuesday. The two firms were associated with Chong, the former head of Seoul’s Seongdong District, based on their ties to Seongsu-dong in the district.
Stocks associated with main opposition People Power Party candidate Oh Se-hoon were no exception to the broader weakness. Chin Yang Industry, Chin Yang Poly and Chin Yang Chemical fell 18 percent, 26 percent and 30 percent, respectively, over the same period. The companies had been labeled as Oh-related theme stocks because the CEO of Chin Yang Holdings attended the same university as Oh.
Other politically linked stocks also posted losses. Taeyang Metal, widely viewed as tied to Han Dong-hoon, who ran in Busan’s Buk-A parliamentary by-election as an independent candidate, dropped 16 percent.
Hwacheon Machinery, considered a theme stock linked to minor opposition Rebuilding Korea Party leader Cho Kuk, who ran for a parliamentary seat in Pyeongtaek, Gyeonggi Province, also slid 16 percent.
Stocks seen as linked to political figures have long been prone to sharp, short-lived rallies during election periods as investors pile into companies perceived to have personal, regional or academic ties to prominent candidates.
The trend was highlighted in research by the Korea Capital Market Institute examining political theme stocks during the 16th through 19th presidential elections.
On average, these stocks climbed 6.47 percent in the five trading sessions leading up to Election Day. In the five trading days following elections, however, they posted an average decline of 7.7 percent, underscoring their speculative nature.
Source: Korea Times News
