By Yoon Ja-young
Staff Reporter
The stock market regulator strengthened supervision on presidential election theme shares that have disturbed the bourse recently. Analysts warn investors to take special heed when investing in these shares, as their prices often fluctuate on groundless rumors.
The Market Oversight Commission at the Korea Exchange (KRX), the country's stock market operator, said that it has enhanced monitoring on stocks related with presidential candidates or their pledges.
On the watch list are 15 stocks, including the ones expected to benefit from the leading presidential candidate Lee Myung-bak's canal project and those related with a railroad project pledged by the pro-government candidate Chung Dong-young. The ones tied with former opposition leader Lee Hoi-chang, who recently announced his bid, are also on the watch list.
The commission noted that these stocks recorded on average 15 percent daily fluctuation during the last month, much higher than the average 2 percent fluctuation of other stocks. The turnover rate of daily transaction to the number of listed shares stood at 30 percent, about ten times higher than the average 3 percent turnover rate of other stocks. The watchdog said these figures prove speculative investment is occurring in these theme stocks.
Theme stocks used to be just related to election pledges, but now ones only slightly related to the candidates are also disturbing the market, the commission warned. Danam, a telecommunication equipment company, for example, skyrocketed for over ten days on revelation of the CEO's relationship with Lee Hoi-chang. The CEO's uncle is the father-in-law of Lee's son. It rose almost four times from around 1,000 won in mid October, on this insignificant relationship with the candidate.
Eehwa, TSConstruct, and SDC, all regarded as theme stocks for the former Seoul mayor's canal plan, and Miju Rail related with Chung are also fluctuating over election news.
The commission warned about blind investment as there is little ground to sustain rises. Most election theme stocks that heated up the market have fallen over 30 percent from their peak.