Ignoring When Stocks Fall? ... No Reports on Top 20 Stocks by Decline Rate

A Comprehensive Survey of Domestic Securities Firm Reports Published from the Beginning of the Year to the 1st
Report Publication Stock Ratio: KOSPI 56%, KOSDAQ Only 18%

This year, it has been revealed that there was a severe shortage of analysis reports from domestic securities firms' research centers on stocks that experienced significant price drops. The 20 stocks with the worst returns were not analyzed at all. Critics argue that securities firms, which should be monitoring the market comprehensively, are thoroughly ignoring stocks whose prices are falling.

According to the Korea Exchange and financial information provider FnGuide on the 7th, there were zero securities reports on the 20 stocks with the highest combined KOSPI and KOSDAQ price declines. This is based on a full survey of domestic securities firms' reports published from the beginning of the year until the 1st of this month. Among the top 20 stocks with the highest price declines were many stocks (Daesung Holdings, Seongwang, Seoul Gas, Daehan Textile, Samchully, Dongil Industry) that hit the lower price limit after consecutive 'stock manipulation' suspicion incidents in April and May. These stocks were targeted by malicious stock manipulation over a long period, causing massive losses to most investors, yet not a single securities firm analyzed them.

Even when expanding the scope to the top 50 stocks by decline rate, only three stocks had reports issued. A total of nine reports were published on SD Biosensor (-58.21%, hereafter decline rate), KMw, and HFR, with seven of these reports recommending 'Buy.' There were no 'Sell' opinions, and only two were 'Hold.'

From the beginning of the year until the 1st, the number of stocks with at least one analysis report issued by securities firms was 451 for KOSPI and 288 for KOSDAQ. Compared to the total listed companies in each market (KOSPI 804, KOSDAQ 1559, excluding preferred stocks, SPACs, REITs, etc.), this represents 56% for KOSPI and 18% for KOSDAQ. Overall, while KOSPI, which has a larger market capitalization, barely exceeded half, KOSDAQ did not even reach one-fifth, meaning investors must make 'blind investments' in the remaining approximately 1,300 stocks.

The listed company with the most analysis reports from securities firms was Samsung Electronics, the undisputed number one in KOSPI market capitalization, with a total of 153 reports. All were buy recommendations. Following were LG Energy Solution (134 reports), LG Electronics (121), Hyundai Motor (116), and Kia (111), mainly large-cap companies. In KOSDAQ, L&F had the most with 62 reports, followed by SM (59) and Studio Dragon (53).

Because securities firms hardly cover stocks in a downward trend, the proportion of 'sell' reports was very small. During this period, a total of 9,969 reports were issued, of which only three (two for KakaoBank and one for Jeju Air) were sell opinions, accounting for just 0.03%. Hold opinions were about 5.7% (572 reports). The remaining approximately 9,400 reports were overwhelmingly 'buy' (including strong buy) recommendations.

The financial authorities have already taken steps to curb this practice in securities firms' research centers. The Financial Supervisory Service's work plan for this year includes 'improving report reliability.' In early last month, Ham Yong-il, Deputy Governor of the FSS, held a meeting with securities industry officials on this topic, stating, "It is very regrettable to blame only the market environment without reflecting on past practices," and added, "We will promote measures to enhance the independence of securities research departments, including analyst performance evaluations, budget allocation, disclosure method improvements, and the introduction of an independent research system."

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