Abnormal Preferred Stock Surge, Average 171% Increase This Month... Exchange Issues Investor Caution Warning

Top 20 Preferred Stocks by Price Increase in June: 171% vs Common Stocks 17%
Preferred Stocks Rise 10 Times More Than Common Stocks · Discrepancy Rate 918%

[Asia Economy Reporter Oh Ju-yeon] The Korea Exchange recently warned investors to be cautious as some preferred stocks are showing abnormal surges regardless of corporate performance.

On the 17th, the Korea Exchange Market Surveillance Committee distributed a 'Investment Caution Notice' to alert investors and prevent herd trading.

According to the notice, the average price increase rate of the top 20 preferred stocks this month was 171%, more than 10 times higher than the common stocks' increase rate of 17%. The price divergence rate between preferred and common stocks also showed a very high average of 918%.

Source=Korea Exchange

The preferred stocks with sharp price increases were mostly low-liquidity stocks with a small number of listed shares and low market capitalization.

Samsung Heavy Industries preferred stock is a representative example. Samsung Heavy Industries preferred stock continued a 10-trading-day consecutive limit-up streak starting from the 2nd. The stock price, which was traded at 54,500 KRW on the 1st, soared to 744,000 KRW, a 13.7-fold (1265.1%) increase. The price divergence rate compared to the common stock (6,470 KRW) reached 11,399%.

The reason Samsung Heavy Industries preferred stock could maintain a consecutive limit-up rally in a short period is due to the small number of circulating shares. The number of listed shares of Samsung Heavy Industries preferred stock is only 114,845, which is about 0.2% of the common stock. Therefore, it is considered a stock where so-called 'forces' can use a limit-up consolidation strategy.

The Exchange pointed out that during unstable market periods, preferred stocks showing sharp price fluctuations have a possibility of market manipulation and unfair trading. Most preferred stocks with sharp price increases have a small number of listed shares and low market capitalization, which may cause liquidity constraints.

Accordingly, investors are urged to make rational judgments based on the corporate performance and fundamentals of common stocks.

The Exchange stated, "We are closely monitoring unfair trading related to preferred stocks. If unfair trading activities are detected, we will strongly respond in cooperation with financial authorities." It also requested, "Please actively report any suspicious unfair trading activities involving false or exaggerated information dissemination related to preferred stocks."

This content was produced with the assistance of AI translation services.