2024-03-29 15:29:04
Enlarge photo Cho Kuk, leader of the Fatherland Innovation Party, visits Dongseong-ro, Jung-gu, Daegu on the 28th and wipes away rainwater while campaigning. [사진출처=연합뉴스]
“Political theme week is back.” “Is it okay to enter into politically themed stocks?”
This month, you can often find stories related to political-themed stocks in various stock-related communities. As the general election for the National Assembly approaches in April, political-themed stocks are once once more on the rise in the stock market. Investors are required to be especially careful as there are frequent cases of sudden sharp declines even following a frightening upward trend.
As of 11:30 am on the 28th, Hwacheon Machinery is trading at 6,080 won, down 620 won (9.25%) from the previous day.
On the 22nd, Hwacheon Machinery rose to 9,700 won intraday, setting a new 52-week high.
However, following a 23.69% drop the previous day, it also showed a large drop today and is quickly giving back the gains. Considering that the previous day’s closing price was 6,700 won, it is a loss of 30.92% from the high point.
Hwacheon Machinery is a company that produces and sells machine tools, including large wind power processing machines, but has recently been attracting more attention among investors as a ‘Cho Kook-related stock’. This is because Nam Gwang, former auditor of Hwacheon Machinery, is the leader of the Cho Kuk Innovation Party and an alumnus of UC Berkeley Law School. Representative Cho Kuk drew a line last year on his Facebook page, saying, “I and my family have no connection whatsoever with ‘Hwacheon Machinery,’” but they are still tied up as related stocks.
Enlarge photo Hwacheon Machinery stock price trend over the past 5 days. [사진 출처 = 구글 파이낸스 갈무리]
The recent plunge in Hwacheon Machinery’s stock price is interpreted as the result of Hwacheon Machinery Chairman Kwon Young-yeol’s announcement that he sold all of his 508,540 shares on the market over the past two days on the 19th and 20th. Typically, a major shareholder’s sale of shares is considered a signal that the stock price has peaked and is likely to lead to a decline in the stock price.
Even if it is not just the sale of shares by major shareholders, it is not just a matter of one or two days for the stock prices of politically themed stocks to rise or fall significantly. This is because Dongshin Geolseol and A-Tech, the theme stocks related to Lee Jae-myeong, leader of the Democratic Party of Korea, and Raemongraein and Deokseong, stocks related to Emergency Response Committee Chairman Han Dong-hoon, are in a similar situation, with repeated rapid ups and downs.
Dongshin Construction, headquartered in Andong, Gyeongbuk, the hometown of CEO Lee Jae-myeong, rose to 31,850 won during the trading session on the 25th, but as of 11:30 a.m. on this day, it is trading at 26,450 won, down 2,550 won (8.79%) from the previous day.
Laemongraein also rose to 24,400 won during the day on the 14th, but was pushed back to the 14,000 won range. Wider Planet, of which actor Lee Jung-jae is the largest shareholder, recently became a shareholder of Raemongraein through a paid-in capital increase. In November of last year, when a photo of a dinner between Lee Jung-jae and then-Minister of Justice Han Dong-hoon was released, Raemongraein became a Han Dong-hoon theme stock.
Meanwhile, the Financial Supervisory Service is operating an intensive reporting period and conducting special crackdowns on unfair trading practices related to political-themed stocks until April 10. It is pointed out that investment risk is high because, regardless of the company’s performance, it is often classified as a theme stock based on simple personal relationships such as politicians’ academic or regional connections or without any reasonable basis.
The Financial Supervisory Service advised, “In the case of stocks whose stock prices have risen sharply for no particular reason, investment losses may be caused by large volatility, and it is difficult to predict stock prices, so you must be cautious when investing.”
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