By Kim Tae-jong
The nation’s stock market operator Wednesday, said it will launch an investigation to see whether a group of stock price manipulators were involved in the recent massive foreign purchases of “theme stocks,” positioned to exploit political trends.
The move came as foreign traders bought politics-themed stocks worth 37 billion won for just eight trading days between Sept. 19 and 28, although their prices sharply plunged. These purchases have raised suspicions that price manipulators attempted to generate artificial volume to gain illegal profits.
An official from the Korean Stock Exchange (KRX) said the operator will look into the massive trading of theme stocks through foreign accounts and report to the financial authorities if any irregularities are found.
“We will analyze the foreign buying of politics-themed shares,” an official from KRX said. “We will look at who are the actual account holders of such stocks, as we believe many of them are highly suspected to be those of price manipulators.”
The KRX official noted that they could be local traders disguising themselves as foreign investors, as it is possible for Korean nationals to open accounts overseas and pretend to be foreign investors in order to avoid the authorities’ clampdown on stock price manipulation.
Market insiders also said some stock price manipulators take advantage of foreign accounts, which make it hard for the financial regulators to crack down on stock price schemes.
“It is also true that individual traders can be misled by trading stocks by those using foreign accounts,” a stock analyst said.
The financial authorities have warned the trading of such stocks disrupts the market order and breeds price rigging.
The value of these stocks tend to move rapidly and suddenly based on the changing prospects of future presidential hopefuls and other influential politicians as intensity heightens ahead of this year’s presidential election.
The shares of companies directly or indirectly are linked to potential presidential candidates and have been shooting up in recent months despite the absence of any firm corresponding business-related reason.
AhnLab, the computer anti-virus software firm founded by Ahn Cheol-soo, a strong candidate for the upcoming presidential election, has been among the big stock market winners.
The Financial Supervisory Service has been already monitoring the shares of about 100 companies that have been fluctuating dramatically in tandem with political rumors.