Even as KOSDAQ Plummets, Political Theme Stocks Stay 'Hot'

Stock Prices of Theme Stocks Related to Lee Nak-yeon, Democratic Party Leader, Show 'Roller Coaster' Fluctuations

Lee Nak-yeon, leader of the Democratic Party of Korea, is attending the on-tact party meeting held at the National Assembly on the 27th and performing the national ceremony. Photo by Yoon Dong-joo doso7@

[Asia Economy Reporter Minwoo Lee] Stocks related to political themes involving Lee Nak-yeon, leader of the Democratic Party of Korea, are experiencing a rollercoaster ride.

According to the Korea Exchange on the 27th, the robot specialist company Hurim Robot closed at 1,270 KRW, up 29.86% from the previous day. It hit the daily limit for two consecutive days, reaching its highest price this year. Semiconductor equipment company Codym also surged, recording 318 KRW, up 29.80% from the previous day. Woojin and Sambu Construction also rose by 8.11% and 25.20%, respectively. Their commonality is that they are all 'Lee Nak-yeon theme stocks.' When Lee Gye-yeon, Lee Nak-yeon's younger brother and former CEO of Samhwan Enterprise, was appointed CEO of Sambu Construction, companies holding related shares surged one after another.

Hurim Robot is the largest shareholder holding 10.48% of Sambu Construction shares. Codym is also connected to Sambu Construction through Hurim Robot. Codym holds more than 99% of the shares of ENK Consortium, the largest shareholder of HNT, which is the largest shareholder of Hurim Robot. It also invested about 50% in E&C Growth Private Equity Partnership, which holds shares in Sambu Construction. Through Hurim Robot and E&C Growth Private Equity Partnership, they effectively secure nearly 20% of Sambu Construction shares. Woojin holds 5.24% of Sambu Construction shares through Woojin Invest Private Equity Partnership, which has a 99.30% stake.

There was a similar movement in Namseon Aluminum, an aluminum specialist company that was identified earlier as an 'Lee Nak-yeon theme stock.' In 2018, Namseon Aluminum's stock price surged as it was highlighted that the CEO of Samhwan Enterprise, a fellow SM Group affiliate, was Lee Gye-yeon. At that time, the stock price, which hovered around 1,200 KRW, nearly tripled within two months. Later, as Lee Nak-yeon was mentioned as a potential presidential candidate for the ruling party, it steadily gained attention as a political theme stock, rising to 7,980 KRW on April 6, but closed at 3,955 KRW the previous day.

The securities industry warns against rash investments in political theme stocks. Since they are influenced more by public opinion than by business conditions and performance, they can plummet at any time, causing investors to suffer significant losses. The Lee Nak-yeon theme stocks that surged the previous day have already turned downward. As of 11:07 a.m. that day, Sambu Construction was trading at 3,620 KRW, down 7.18% from the previous day. Woojin (-8.56%) and others are also in a downward trend. A financial investment industry official expressed concern, saying, "Political theme stocks are very risky themes where amateur investors are highly likely to incur losses," and added, "In uncertain markets like recently, get-rich-quick investments are a no-go."