Park Jae-hyuk is a seasoned journalist who has provided comprehensive coverage of South Korea's corporate dynamics, economic policies, industry challenges and the global positioning of Korean companies. Based on the articles he has written since joining The Korea Times in 2016, his investigative approach has helped readers understand corporate governance, economic trends and business strategies shaping South Korea’s economy.
Austem falls victim to Osstem Implant scandal
By Park Jae-hyuk
Investor confusion about the names of Kosdaq-listed firms
By Park Jae-hyuk
A recent controversy over an Osstem Implant employee's alleged embezzlement of 188 billion won ($156 million) from his company has affected the stock price of Austem unexpectedly, as investors have been confused by the similar names of the two Kosdaq-listed companies.
After police arrested the Osstem Implant employee on Wednesday night, Austem's stock price soared 19.7 percent to 2,800 won during Thursday's intraday trading, although it ended up closing at 2,440 won, up 4.27 percent from the previous session's close.
Both “Osstem” and “Austem” are written identically in Korean, so inexperienced investors mistakenly believed that Osstem Implant was affiliated with Austem. Local news outlets fueled the confusion, as they abbreviated the dental implant maker's name in their headlines.
Some investors sold their stakes in Austem, Monday, following Osstem Implant's disclosure of the embezzlement case, which was made shortly before the beginning of this year's first trading session. Osstem Implant's stock transactions have been suspended indefinitely since the disclosure.
Austem shareholders urged the press not to shorten Osstem Implant's name to just Osstem in their news reports. Some asked Austem to change its name.
Founded as YoonYoung in 1990, Austem has manufactured steel wheels, body panels, chassis, seats and ceramic filters for diesel engines. The automotive parts maker changed its name from YoonYoung to Austem in 2005, eight years after it was listed on the Kosdaq market in 1997. Bodyfriend holds a 7.1 percent stake in Austem, as the two companies have cooperated in domestic production of massage chair components.
Market experts advised Korean companies to take more measures to prevent misunderstandings by investors, given that this was not the first time for retail investors to mix up the names of listed firms.
An Osstem Implant employee surnamed Lee, with a hood covering his face, is escorted into Gangseo Police Station in western Seoul, Thursday, after being arrested Wednesday on charges of embezzling 188 billion won from his company. Yonhap
In 2020, Shinpoong Paper's stock price soared unexpectedly with Shin Poong Pharm's bullish run, caused by retail investors who expected the KOSPI-listed pharmaceutical firm to develop a COVID-19 treatment pill. When Shin Poong Pharm's ordinary and preferred shares continued hitting their daily price ceilings, retail investors bought the stocks of the KOSPI-listed paper manufacturer, which is irrelevant to the drugmaker.
After Shin Poong Pharm's stock price plunged on July 24, 2020, Shinpoong Paper's stock price dropped 7.24 percent.
HanmiGlobal's stock price also soared in 2020, after Hanmi Pharm's stock price hit the daily price ceiling following news that the pharmaceutical firm succeeded in exporting its technologies worth 1 trillion won.
However, the two KOSPI-listed firms have no relationship. HanmiGlobal was established as a construction project management company in 1996.
When Hanmi Pharm was under investigation of financial authorities in 2016 on suspicion of insider trading, HanmiGlobal and another irrelevant KOSPI-listed firm, Hanmi Semiconductor, also had to calm their angry shareholders, who misunderstood their relationships.