By Kim Tae-gyu
Staff Reporter
Mirae Asset Chairman Park Hyeon-joo, who founded the country’s biggest asset management group, said late last month that today’s stock market crash provides the best opportunity of the century.
The remarks caused condemnation here as many Mirae Asset clients have lost a good part of their investments after buying shares or subscribing to equity funds encouraged by Park.
However, some seem to believe in Park’s much-criticized insights that shares should be picked up in the bearish market, including the successors of Korean conglomerates such as LG and Hyosung.
Koo Kwang-mo, who is expected to succeed LG Group Chairman Koo Bon-moo, has recently snapped up shares of LG Corp., the group’s holding company, twice.
In compulsory filings to the Korea Exchange, LG Corp. announced that Koo had purchased 55,000 shares of LG Corp. Aug. 27 and an additional 94,000 Oct. 27 for about seven billion won.
Koo acquired the stake at minimal cost thanks to the plunge in stock prices. The value of LG Corp. has more than halved in a year from over 80,000 won last October to below 40,000 won last month.
Through the moves, Koo Kwang-mo substantially increased his stake in LG Corp. to 4.53 percent, which is the fourth highest following his legal father, biological father and uncle.
Widely regarded as heir apparent of the LG Group, Kwang-mo is son of Heesung Group Chairman Koo Bon-neung but was adopted in 2004 by his uncle, LG Group Chairman Koo Bon-moo.
He got aboard LG Electronics, the group’s flagship affiliate, as an assistant manager of finance in 2006 and is studying business administration at Stanford University.
``Thinking of LG Group’s management style, I think senior Koo’s would have recommended Kwang-mo to increase its stake at a time when stock prices are cheap,’’ said a source who is familiar with the issue.
``It is an easy way to strengthen the ground of the heir apparent ― to gobble up shares when they are dirt-cheap. Similar actions are likely to continue,’’ he said.
Two sons of Hyosung Group Chairman Cho Suk-rae, concurrently head of the business lobby Federation of Korean Industries, also jacked up their stakes in time to the stock market turmoil.
Chairman Cho’s second son, Hyun-moon, and third son Hyun-sang, bought 128,370 shares and 53,006 shares to significantly crank up their stakes in Hyosung Corp. to 6.93 percent and 6.7 percent, respectively.
Hyun-moon is executive vice president of Hyosung Corp., which accounts for about 80 percent of annual turnover in Hyosung, while Hyung-sang is senior vice president of the firm.
Thanks to the maneuvers in October when Hyosung’s stock price halved in just a month, the combined stakes of Chairman Cho and his three sons nudged up to 30.25 percent.
Even Chairman Cho’s three grandchildren, one aged six and the others aged two, were found to have purchased more than 10,000 shares of Hyosung Corp. worth half a billion won.
Experts point out the exploit-the-bearish-market strategy may end up causing ethical controversies even though they have no legal problems.
``If you have money, you can buy whatever stocks you want to buy. It is perfectly legal as in the chaebol cases,’’ Hanshin University professor Kim Jong-yup said.
``But chaebol’s large-scale purchases of its own shares involves the father-to-son power transfer of Korean capital, where blood matters rather than capability,’’ he said.
Chaebol refers to Korea’s sprawling conglomerates, in which founding families exercise almost unchecked control despite small direct shareholdings.
Chaebol founders have passed on managerial rights to their offspring in a variety of ways, causing debates, sometimes legal and sometimes ethical.