Regulator to probe price swings in politician-linked shares

Korea's financial regulator pledged Tuesday to step up its surveillance on speculative movements in prices of stocks linked to candidates for the December presidential poll.

The move comes as shares related to major candidates for the upcoming election have undergone price swings, raising suspicion over manipulation and inflicting huge losses on individual investors.

"A special investigation team will keep tabs on such stocks until the presidential election is over," an official from the Financial Supervisory Service (FSS) said. "We are determined to eradicate any attempt to take advantage of them."

Retail investors lost 1.54 trillion won ($1.38 billion) from their investments in 35 stocks linked to politicians between June last year and May this year, the FSS added.

So-called "celebrity shares," usually related to politicians or celebrities, have become the darlings of local retail investors wishing to earn a windfall, market watchers said.

Such shares include AhnLab Inc., Korea's largest anti-virus software firm on the secondary bourse, which is founded by the liberal independent presidential hopeful Ahn Cheol-soo.

Another recognized company is EG Co., an iron oxide manufacturer, as it is headed by a younger brother of the ruling Saenuri Party's presidential candidate, Park Geun-hye.

These shares had been on the rise, but tumbled after Park was nominated as the governing party's standard-bearer on Aug. 20, and Ahn declared his candidacy on Wednesday.

Market analysts said investors should be wary of these stocks because the "celebrity effect" could be utilized as a means of manipulating prices of those stocks. (Yonhap)