Anna Jiwon Park has been covering the politics at The Korea Times since the summer of 2024, when she joined the press pool for the Office of the President in Korea. Prior to that, she spent about five years reporting extensively on financial markets, regulatory authorities and the financial industry. She joined The Korea Times in 2019 after spending eight years as a broadcast journalist at Arirang TV, Korea’s leading global broadcaster, covering politics, defense and culture.
Politics-themed stocks plunging ahead of elections
Ruling Democratic Party of Korea presidential candidate Lee Jae-myung, left, and main opposition People Power Party presidential candidate Yoon Suk-yeol / Yonhap
By Anna J. Park
By Anna J. Park
With the country's presidential election only 10 days away, most election-themed stocks' prices have been on a downward spiral over the past week, according to market analysts, Sunday. Election-themed stocks refer to local listed stocks that bear some relevance ― whether it be significant or random in nature ― with the major presidential candidates. These stocks' prices tend to fluctuate heavily, according to the ebb and flow of candidates' changing levels of popularity during election campaign periods, they said.
The analysts warn investors that such election-themed stocks tend to fall drastically when elections are approaching, and investing in companies that do not bear any significant relevance to the candidates is like a pure gamble.
Byun Joon-ho, an analyst at Heungkuk Securities, said that extreme volatility has been seen in the prices of such election-themed stocks since late last year.
“As it is not highly likely that the local stock market will log a very bullish run following the presidential election on March 9, groundless expectations of such stocks' moves should be avoided,” he said.
A market insider, who declined to be named, strongly discouraged investments in election-themed shares. “Investment failures from putting money into companies that do not have any actual relevance to the presidential candidates should solely rest upon the investors themselves.”
For instance, Ilsung Construction, a mid-sized local construction company in Korea, has been branded as a potential beneficiary of the ruling Democratic Party of Korea candidate Lee Jae-myung's long-term public housing pledge.
The stock price finished at 3,410 won ($2.8) on Friday's closing, which is more than a 57-percent fall from its intra-trading peak of 7,970 won in October. The stock is one of the top three stocks listed on the main benchmark KOSPI market, which has logged the largest loss since the start of this year.
Similarly, NE Neungyule, a local education company, has been assessed as one of main opposition presidential candidate Yoon Suk-yeol's beneficiary companies, just because the firm's largest shareholder has the same family name as the conservative presidential candidate. Despite the fact that the company clearly stated that the firm's business has nothing to do with the politician, the firm's stock price has been fluctuating in line with Yoon's campaign.
The stock price hovered at around 2,800 won in late 2020, yet its price soared 10 times to the level of 30,750 won in mid-June of last year. That's when the former Prosecutor General was on the verge of deciding to run in the presidential race. Nonetheless, the price then fell more than 55 percent, finishing at 13,400 won late last week.
Most other election-themed stocks that have similarly random or sometimes more obvious connections to the presidential candidates plunged recently.
AhnLab, the computer software company founded by People's Party presidential candidate Ahn Cheol-soo, also plunged to 68,800 won late last week, about half of its intra-day peak of 128,500 won logged in early January.