Response Submitted to Exchange's Disclosure Inquiry
FSS "Currently Investigating Stock Community Related Matters"
On the 14th, five listed companies?Daehan Textile, Dongil Metal, Dongil Industry, Manho Steel, and Banglim?that hit the lower price limit during trading announced in their disclosure that there were no confirmed issues regarding unfair trading in response to the inquiry disclosure request.
On the 15th, Dongil Metal responded to the Korea Exchange's inquiry disclosure request concerning rumors or reports by stating, "The company is not aware of any specific details, and the company is unrelated to the contents reported by various media." Banglim also explained, "There are no confirmed details regarding the specific content, and we are carefully examining the causes or background related to the sharp decline in stock price." Manho Steel, Dongil Industry, and Daehan Textile issued similar responses on the same day.
This follows the Financial Services Commission, Financial Supervisory Service, and Korea Exchange initiating an investigation into unfair trading related to the stocks that hit the lower price limit the previous day. The Korea Exchange suspended trading of the five stocks and requested inquiry disclosures. Three stocks (Dongil Metal, Banglim, Manho Steel) were designated as investment caution stocks.
These stocks suddenly plunged to the lower price limit around noon the previous day. Around 11:46 a.m., Banglim, a KOSPI-listed company, hit the lower price limit, followed by Dongil Metal, Dongil Industry, Manho Steel, and Daehan Textile consecutively entering the lower price limit. Since the stocks that hit the lower price limit had high major shareholder equity ratios, relatively low circulating shares, and had risen significantly over the past three years?similar to the Soci?t? G?n?rale (SG)-triggered Contract for Difference (CFD) stock price crash?some expressed concerns that the CFD-related stock price crash might be repeating. However, considering that most securities firms have suspended CFD trading and that the selling window was not concentrated in one place, it is judged that this is not a similar incident to the SG case. According to current findings, it appears that the stock sell-off volume from Naver's stock community 'ㅂ' Investment Research Institute influenced the market.
Meanwhile, regarding this incident, the Financial Supervisory Service explained that it has been aware of the matter for a long time and will work toward a swift resolution. At the National Assembly's Standing Committee on Finance and Economy plenary session that day, Lee Bok-hyun, Governor of the Financial Supervisory Service, said, "This has been monitored for a long time, and we have grasped the facts to some extent regarding unusual trends or causes related to stock price rises and falls, as well as related parties," adding, "We are also investigating the facts related to rumors or speculations concerning (stock-related community operators)."
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