[Desk Column] The Bittersweet Evolution of Themed Stocks

Jeon Pil-su, Head of Capital Markets Department and Head of Corporate Analysis Department

[Asia Economy Jeon Pil-su, Head of Capital Markets Department and Corporate Analysis Department] "We will conduct a comprehensive review of the national energy policy, including the nuclear phase-out policy. We will fully develop the nuclear power industry into an export-oriented industry to create jobs."

This was stated by former Board of Audit and Inspection Chairman Choi Jae-hyung when he announced his candidacy for the presidential election. Given that he had made his presence known by putting the brakes on the government's nuclear phase-out policy, this statement was quite predictable. His remarks were met with cheers not only from his supporters but also from some corners of the stock market. On the 4th, when former Chairman Choi declared his candidacy, Doosan Heavy Industries & Construction, considered a representative nuclear power stock, rose nearly 5% for the first time in a while, and KEPCO Engineering & Construction and KEPCO Industrial Development also rose by 3-4% each.

Although they did not show a spectacular double-digit surge, nuclear power-related stocks effectively made their debut as so-called presidential election theme stocks. For former Chairman Choi, it can be said that he made his presence felt among the 15 candidates from the main opposition party. It is rare for opposition candidates, who have announced their candidacies one after another, to have theme stocks named after them. Only former Prosecutor General Yoon Seok-youl, who has maintained an unshakable lead in the opposition, and Representative Hong Joon-pyo and former Representative Yoo Seung-min, who have been known since the last presidential election, can be said to have their own theme stocks.

Presidential election theme stocks first appeared in earnest in our stock market in 2007. At that time, candidate Lee Myung-bak's pledge to develop the Four Major Rivers gave rise to the so-called 'Four Major Rivers theme stocks.' Some small and medium-sized construction companies with technology to dig underground tunnels saw their prices increase more than tenfold, attracting investors. When it was announced that bicycle paths would be built along the Four Major Rivers, bicycle-related stocks also rose accordingly. Each time related policies were announced, stocks of companies with similar businesses surged, leading to a proliferation of MB theme stocks.

Following that was the Park Geun-hye theme. Theme stocks began to form around former President Park, who competed against former President Lee Myung-bak in the 2007 party primary. At that time, since she had pledged welfare policies such as elderly allowances and economic democratization, stocks related to economic democratization also formed a theme. However, the main focus of the Park Geun-hye theme was on network-related stocks. Companies associated with Park's close relatives, such as her younger brother Ji-man's company and her nephew-in-law's company, as well as companies that recruited people involved in Park's campaign as outside directors, received attention.

The Ahn Cheol-soo theme stocks, which have formed a group of presidential election theme stocks for 10 years, were mostly formed through personal connections, and many aspects of this are bittersweet. While Ahn's own company, AhnLab, founded by him, naturally attracted attention, the connections of the other theme stocks are laughable. There were incidents where stocks surged more than tenfold simply because someone who had worked with Ahn was previously part of the management. Because of this, some theme stocks had to issue disclosure statements saying 'there is no reason for the surge' repeatedly.

Looking at the theme groups of leading candidates from both ruling and opposition parties ahead of next year's presidential election, personal connection stocks still dominate. In the case of former Prosecutor General Yoon's theme stocks, many stocks joined the theme simply because their major shareholders belong to the same 'Papyong Yoon clan.' Former Representative Lee Nak-yeon attracted attention for companies where his younger brother is or was an outside director. Among the theme stocks of former Chairman Choi Jae-hyung, who revived nuclear power stocks as presidential election theme stocks, companies related to 'Kyunggi High School - Seoul National University' form one pillar.

In fact, most presidential election theme stocks have no direct connection to the candidates themselves. Naturally, it would be unfair to evaluate presidential candidates based on theme stocks. However, considering that theme stocks are formed by tapping into public sentiment toward presidential candidates, candidates should consider from which side their theme stocks are being formed.

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