‘SNS’ as Owner Risk... Will Shinsegae Become a 'Meme Stock'?

Market Cap of Shinsegae Group Stocks Drops by 200 Billion KRW After 'Myeolgong' Remarks
Growing Public Attention on Shinsegae Vice Chairman Jeong Yong-jin and Shinsegae

[Asia Economy Reporter Gong Byung-sun] The stock price of Shinsegae is fluctuating following Vice Chairman Chung Yong-jin's 'Myeolgong (滅共)' remarks. The overlap with the presidential election phase has drawn public attention, negatively impacting the stock price.

According to the Korea Exchange on the 11th, Shinsegae closed at 233,000 won, down 6.8% (17,000 won) from the previous day. Other Shinsegae-related stocks also declined. Shinsegae International, which operates a cosmetics business in China, fell 5.34%. Due to this decline, Shinsegae Group's market capitalization decreased by 220.5 billion won in one day.

It is interpreted that Vice Chairman Chung's Myeolgong remarks on social media influenced this. On the 6th, he posted a photo of Chinese President Xi Jinping on his Instagram with hashtags such as 'Myeolgong,' 'Banggongbangcheop,' and 'Seunggongtongil.' When controversy arose, he replaced the photo of President Xi with one of North Korean Supreme Leader Kim Jong-un. However, the controversy escalated into an owner risk issue when Yoon Seok-yeol, the People Power Party's presidential candidate, posted a photo of himself purchasing anchovies and beans at Emart, which could be associated with Myeolgong.

Owner Risk Linked to Presidential Election... Increasing Investor Attention

Experts note that this owner risk differs somewhat from previous ones. Unlike past incidents such as Vice President Cho Hyun-ah's nut rage incident at Korean Air or Namyang Dairy's franchisee bullying scandal, this case is not related to illegality. When illegality is involved, corporate governance is shaken, and related issues periodically resurface, but this is not the case with Vice Chairman Chung. Hwang Se-woon, a research fellow at the Korea Capital Market Institute, explained, "In Korea, owner risks have mainly been highlighted due to social perception deterioration caused by power abuse. This time, the issue overlapped with the presidential election, making it a short-term controversy."

In fact, Vice Chairman Chung's controversial remarks existed before but did not significantly affect the stock price. On May 25 last year, he posted a photo of a lobster on SNS with the caption, "Goodbye, lobster. Sorry and thank you." This post sparked controversy for allegedly mimicking former President Moon Jae-in's Sewol ferry guestbook entry and led to a boycott. However, Shinsegae's stock price rose 6.46% from May 25 to 31 last year.

Although there are concerns about possible retaliation from China, nothing has materialized. Separate from Vice Chairman Chung's remarks, Shinsegae International's decline is also interpreted as related to weak consumption in China. On the same day that Shinsegae Group stocks plunged, LG Household & Health Care fell sharply by 13.41%, and cosmetics-related stocks generally declined. This is due to the slow recovery of Chinese consumption amid COVID-19 uncertainties.

However, given the sensitivity during the presidential election phase, the public is expected to pay closer attention to the future actions of Shinsegae and Vice Chairman Chung. It means that Vice Chairman Chung himself has effectively turned Shinsegae into a 'Meme stock' (photos or videos trending on the internet). According to the Korea Exchange, individuals who had net sold Shinsegae worth 4.3 billion won from the 3rd to the 7th of this month net bought 20.3 billion won worth of shares the previous day. Trading volume also surged. The average daily trading volume by individuals from the 3rd to the 7th was only 3,424 shares, but it reached 87,210 shares the previous day. Kim Woo-chan, a professor at Korea University’s Business School, said, "Whether voluntarily or involuntarily, Shinsegae has started to move like a meme stock," adding, "However, since Vice Chairman Chung has stated he will not make any further comments, the related risk is expected to decrease."

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