Political Theme Stocks Show Excessive Overheating... Warnings Fail to Work

Orient Jeonggong Five Consecutive Days of Limit-Up Rally
Despite Exchange's Investment Warning Designation, Surge Continues
Frenzy to Find New Thematic Stocks

In the domestic stock market, political theme stocks have been gaining prominence since the December 3 emergency martial law incident. Although the Korea Exchange designated them as investment warning stocks, the 'theme frenzy' is intensifying. Some investors are even digging into genealogies to find political theme stocks that have not yet risen much.

According to the financial investment industry on the 11th, the stock price of Orient Precision increased by 270.0% over five trading days starting from the 4th. The stock price, which was 1,131 won on the 3rd, just before President Yoon Seok-yeol declared martial law, soared to 4,185 won in five days.

Earlier, on the 6th, the Korea Exchange announced that it would designate Orient Precision as an investment warning stock. Additionally, it requested a disclosure inquiry to ask about the reason for the rapid stock price increase. The company stated that there was no important information to disclose separately regarding significant market fluctuations.

Orient Precision is a listed company that has been known as a theme stock related to Lee Jae-myung, the leader of the Democratic Party of Korea, since the impeachment of former President Park Geun-hye. Lee worked at Orient Watch from 1979 to 1980. Previously, on January 23, 2017, he declared his presidential candidacy in front of the Orient Watch building in Sangdaewon-dong, Jungwon-gu, Seongnam City. At that time, Lee posted on social networking services (SNS), "At the Orient Watch factory, a worker from this factory declares candidacy for the 19th President of the Republic of Korea." Orient Watch is an affiliate of Orient Precision.

Other stocks related to Lee, such as Estaco, Dongshin Construction, and Ilseong Construction, also rose more than 200% in five days. Dongshin Construction, headquartered in Andong City, Gyeongsangbuk-do, is attracting individual investors because it is a hometown company of Lee. The Korea Exchange also designated ATEC, Dongshin Construction, Total Soft, Ilseong Construction, Estaco, and ATEC Mobility as investment warning stocks. When the stock price of a specific stock rises abnormally rapidly, it is designated as an investment warning stock to alert investors and prevent unfair trading in advance. This is a measure to stabilize the market by suppressing speculative demand and calming rapid stock price increases.

Although Lee Bok-hyun, Governor of the Financial Supervisory Service, chaired a financial situation inspection meeting on the 5th and ordered a detailed analysis of political theme stocks, the theme stocks seem to be spreading further. Governor Lee urged, "Until the market stabilizes, please proactively detect and respond to even the smallest abnormal signs without omission."

However, some individual investors are eager to find theme stocks that have not risen much. The day before, rumors circulated among some investors that certain listed companies could become theme stocks because Lee is from the Gyeongju Lee clan, Kukdang branch. Coincidentally, the stock price of cosmetics company V rose more than 20%.

A financial investment industry official said, "The harm of 'blind investment' related to the rapid rise of political theme stocks has already been confirmed over the past several years," adding, "The phenomenon of rapid fluctuations in stock prices related to prominent politicians is repeating ahead of the presidential election." He added, "When the political theme issue disappears and calms down, the stock price returns to its original position."

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