’Theme stocks’ crackdown upsets small-time investors
By Kwaak Je-yup
Scores of people are protesting the financial regulators’ decision to crack down on what they consider irrational investing, with angry phone calls, web posts and online petitions.
Prices for many of these so-called “theme stocks” plummeted after Financial Services Commission, Financial Supervisory Service (FSS) and Korea Exchange (KRX) made a joint announcement Monday that it would report scammers feeding on rumor-led flash investments. Some national media had named specific companies under investigation, which FSS has categorically denied since.
Many individual traders were caught off guard and suffered heavy losses by following this new strategy investing in firms with proven or unproven ties to prominent political figures. Since then, they have decided to stage online protests, separately and collectively.
FSS and KRX have both reiterated since the controversy broke out that its target for control is the distribution of baseless claims on social networks and messengers, among others.
“No company has been identified by the special investigation team as of now,” said the FSS statement on Monday.
The financial regulator revealed as well on Thursday that securities companies are also under the probe for feeding these theme stock reports through their home-trading system software. The news and the ensuing brouhaha seemed to have little effect on these firms’ share prices on Thursday, ending mildly higher. FSS also said that no particular broker is targeted.
Investment advisory services, which have sprouted up with minimum regulation, have also been named as the rumor mill source. Their credibility is under scrutiny since only 300 million won in start-up capital and two full-time employees are required to issue reports for investors’ consumption under this title.
The FSS online bulletin board has been flooded with letters from furious investors, some coherent and others less so. Phones at the Yeouido offices of FSS and KRX have not stopped ringing since Monday.
“It’s an investor’s right to choose politics-themed stocks or anything else,” said a complaint filed by Choi Ye-rin on the regulator’s website. “Doing so doesn’t harm others.”
Some suggested that these politics-led market movements were nothing new ― rather something investors have taken advantage of.
“Every five years is the festive time we ants (pejorative term for individual investors) look forward to,” said another post by Park Sang-hyeon. “This is an opportunity for those who study up on possible firms.”
Others chose to express their wrath in a rather raw fashion.
“Now I don’t even have money for my mother’s jesa (memorial ceremony at the ancestor’s death anniversary), said a profanity-filled comment from named Kim Gwan-bok.
Meanwhile, the market seemed to come back to normal, as some theme stocks showed signs of return.
Barunson, stationery maker with ties to potential presidential candidate Moon Jae-in, ended 11.34 percent, or 275 won, higher on Thursday to close at 2,700 won per share.
AhnLab, of which founder and now left-wing superstar Ahn Cheol-soo remains a major shareholder, rose 3.10 percent, or 4,200 won, to 139,500 won per share, partially making up for the 10.52-percent loss on Wednesday.