Korea Zinc, MBK Accused of 'Stock Price Manipulation'... Request for Investigation by Financial Authorities

On the Last Day of MBK's Public Tender Offer for Korea Zinc on the 14th
Stock Price Rose to 820,000 Won Intraday Before Plummeting at Close
Korea Zinc States "Cannot Rule Out Possibility of Market Manipulation"

Korea Zinc has submitted a petition to the financial authorities requesting an investigation into allegations of market manipulation related to the 'sudden short-term stock price drop' that occurred on the last day of MBK Partners' tender offer. The suspicion is that the sharp decline in the stock price on the day of the tender offer created a favorable environment for investors to respond to MBK's tender offer.

According to the Korea Exchange on the 17th, on the last day of MBK's tender offer, the 14th, Korea Zinc's stock price steadily rose from the morning and reached a peak of 820,000 KRW at 13:12. This is analyzed to be due to the buying momentum following Korea Zinc's decision on the 11th to raise the tender offer price for its treasury shares to 890,000 KRW and increase the purchase volume to 20%.

However, the stock price plunged to 779,000 KRW just two hours after hitting the peak. Ultimately, the closing price that day was 793,000 KRW, down 1,000 KRW (0.1%) from the previous trading day. This is a completely different pattern from the tender offer for Young Poong Precision, which MBK conducted simultaneously and failed due to a rise in stock price.

Intraday candlestick chart of Korea Zinc stock on the 14th.
[Photo by Korea Zinc]

Korea Zinc has submitted a petition to the Financial Supervisory Service (FSS) alleging possible market manipulation regarding the stock price plunge. According to Article 176, Paragraph 2 of the Capital Markets Act, acts of trading or commissioning/trusting trades that mislead others into believing that the trading of securities or exchange-traded derivatives is active or that manipulate the market price are prohibited.

In particular, Korea Zinc raises suspicions that a specific group intentionally drove down the stock price, considering that the volume of sales surged multiple times during certain time periods after the stock price hit its peak. While some investors might find it advantageous to sell on the market at 820,000 KRW, it is more beneficial to respond to MBK's tender offer if the price falls below 800,000 KRW. Despite this, continuous selling in the market caused the price to drop to the 780,000 KRW range, which is difficult to interpret as a normal market situation.

A Korea Zinc official stated, "With only the data the company has secured, we cannot accurately determine the cause of the sudden price drop, so we requested an investigation from the financial authorities," adding, "Since the FSS has announced that it will take strict measures if unfair trading practices are confirmed during the tender offer process, we will await the investigation results."