When "Ssangyong Car Acquisition" Trends, Retail Investors Launch 'Dakgong'

[Asia Economy Reporter Lee Myunghwan] 'Ssangyong Motor' has rapidly emerged as a key stock keyword among small and mid-cap stocks. As various parties declare their intention to "acquire Ssangyong Motor," related stocks' prices have been fluctuating wildly. Experts advise caution in investing since the actual acquisition capability has not been reliably verified.

According to the Korea Exchange on the 7th, the stock price of Mirae Industry, a Ssangbangwool affiliate, recorded consecutive daily limit-up for two trading days on the 1st and 2nd after news of its intention to acquire Ssangyong Motor was announced. Mirae Industry, which was priced at 14,450 KRW on the 31st of last month, closed at 24,350 KRW on the 4th, soaring 68.51% in just two days. On the following day, the 5th, concerns over acquisition funding and news of a special appeal against the decision to exclude Edison EV from rehabilitation caused the stock to drop 20.94% in one day. Another affiliate, IOK, also recorded consecutive daily limit-ups on the 1st and 2nd but then fell 26.14% and 12.34% on the 5th and 6th, respectively.

Earlier, Ssangbangwool Group announced on the 31st of last month that after Edison Motors' acquisition of Ssangyong Motor fell through, it would form a task force (TF) to proceed with the acquisition. Kwanglim, the group's special-purpose vehicle manufacturer, stated on the 1st in response to a disclosure inquiry from the Korea Exchange KOSDAQ Market Headquarters that it is actively considering acquiring Ssangyong Motor to strengthen business competitiveness and enhance corporate value.

Following the acquisition news, individual investors showed a strong buying trend in related stocks. According to the Korea Exchange, from the 31st of last month to the 6th, individuals net purchased 13 billion KRW worth of Kwanglim shares, the acquisition entity. In contrast, foreigners and institutions sold 1.9 billion KRW and 145 million KRW worth of Kwanglim shares, respectively. During the same period, individuals also net purchased 11.2 billion KRW worth of IOK shares, showing overwhelming buying pressure compared to foreigners (net selling 1.779 billion KRW) and institutions (net buying 56 million KRW).

However, skeptical views have been raised regarding their actual acquisition capability. With the acquisition price of Ssangyong Motor expected to exceed approximately 1 trillion KRW, concerns about the feasibility of funding have emerged. Amid the surge in related companies' stock prices, it was revealed that Mirae Industry, a Ssangbangwool affiliate, sold shares of another affiliate, IOK, further increasing investors' worries.

In response, Kwanglim stated on the 7th, "We have secured a stable funding channel for the acquisition of Ssangyong Motor and will actively pursue the acquisition based on this," adding, "Specific methods of funding will be disclosed in future announcements."

Regarding the profit-taking through the sale of Mirae Industry shares by Ssangbangwool Group affiliates, they explained on the same day, "The sale of IOK shares by Mirae Industry was not for profit-taking but a sale at a loss," and added, "It seems some misunderstandings arose from only partial disclosure."

Experts advise a cautious approach when investing in related stocks. Hwang Sewoon, Senior Research Fellow at the Capital Market Research Institute, pointed out, "It seems many individual investors have vague expectations that the stock price will rise rather than making judgments about the actual acquisition possibility." He added, "There are many factors to consider, such as the process of selecting the acquirer and the time required for post-acquisition normalization," and advised, "Hasty investments as if investing in theme stocks can lead to risky outcomes, so careful decisions are necessary."