gettyimagesbank
Concerns are mounting over the rising impact of social media influencers on the domestic stock market.
Investors are forming devoted fandoms around these influencers, pouring significant sums into stocks recommended by them. Some stocks have even seen their share prices soar by over 100 percent after receiving an influencer's endorsement.
These influencers are often called "finfluencers," a portmanteau of finance and influencer. They are prominent on platforms like YouTube and Instagram, offering insight into investment choices. They manage to translate complex financial data into simpler, more intuitive language, quickly gaining popularity among novice investors who joined the market during the COVID-19 stock market surge.
One of the most notable finfluencers in Korea is Park Soon-hyeok, the former public relations director of Kumyang. Affectionately known to the public as "Battery Ajeossi," his online fan community boasts over a million members. Park recommended eight secondary battery stocks, and among them, EcoPro saw a staggering 750 percent rise this year.
The issue is that some finfluencers can skew the decision-making process of investors and potentially use their influence to manipulate stock prices. There have been instances where finfluencers were discovered to have exploited their clout, recommending stocks they had previously acquired and then profiting after driving up stock prices.
Park himself came under scrutiny by the Financial Supervisory Service. He was discovered to have held the position of division head of the investment management firm while simultaneously serving as an executive at a secondary battery firm, Kumyang.
Another prominent finfluencer, "Super Ants," is also facing legal challenges. Since June 2021, he is alleged to have endorsed five stocks he had bought beforehand, profiting once individual investors began purchasing the stocks he recommended.
While finfluencers could provide well-reasoned advice, acting on their recommendations without due diligence doesn't always yield positive returns. A study by the Swiss Finance Institute revealed that for over 56 percent of finfluencers active on U.S. stock-related social media, their stock recommendations resulted in an average monthly return decline of 2.3 percent.
Currently, there is no straightforward way to regulate these finfluencers unless unfair transactions are identified. Financial authorities believe it's challenging to impose sanctions on finfluencers who disseminate information without monetary compensation. There are concerns about the potential violation of freedom of expression if personal media is regulated. It's also widely recognized that individuals should bear the responsibility for their investment decisions.
In contrast, international financial regulators are taking steps to address these issues. For instance, this July, the United Kingdom decreed that sanctions could be imposed on finfluencers who unlawfully promote financial products that might significantly harm investors.
"Major nations across Europe, the U.S. and Asia are initiating measures to safeguard financial consumers, recognizing the challenges of financial marketing via social media," said Hong Ji-yeun, a senior research associate at Korea Capital Market Institute.
"With the rising prominence of finfluencer activities in the country, it's crucial to ensure that financial products and services advertised on social media comply with existing regulations. Financial consumers ought to exercise caution in their approach. Considering the constantly changing financial landscape and the versatile use of social media, there's a need to contemplate suitable regulatory measures," Hong added.
![[INTERVIEW] Ex-NIS chief urges politicians to stop misusing spy agency](https://img.koreatimes.co.kr/upload/thumbnailV2/59da8df88faa4a50ad42945501b03bca.jpg/dims/resize/178/optimize)
![[REVIEW] Musical 'Monte Cristo' returns with riveting tale of vengeance, love](https://img.koreatimes.co.kr/upload/thumbnailV2/3934be1fa6844478b619a015d610bc5b.jpg/dims/resize/178/optimize)
![[INTERVIEW] Meet the man behind giant rubber ducks that once took over Seoul](https://img.koreatimes.co.kr/upload/thumbnailV2/df32c60c8204448e98ccdb9841366bec.jpg/dims/resize/178/optimize)
