'Rugby Ball' Political Theme Stocks, Sudden Plunge Overnight

Koizu, Estaco, WiseAitek, and Others Plunge Over the Week
Volatile Political Theme Stocks...Concerns Over Retail Investors' Losses
Common Pattern in Political Theme Stocks: 'Eventually Decline'

Since the '12·3 Emergency Martial Law' incident, numerous political theme stocks in the domestic stock market have been experiencing repeated sharp fluctuations. Recently, the theme stocks related to Woo Won-sik, the Speaker of the National Assembly, have newly emerged, attracting attention. Speculative funds quickly withdrew from stocks related to former People Power Party leader Han Dong-hoon and former leader of the Joguk Innovation Party, Cho Guk. Despite past cases where political theme stocks surged briefly and then fell, an investment sentiment of "as long as you don't catch the peak" has spread, leading to continued blind investments by individuals. Market experts have urged restraint in investing in theme stocks, warning that since the timing of declines cannot be predicted, significant losses may occur.

According to the financial investment industry on the 23rd, the stock prices of listed companies recently included in Woo Won-sik's theme stocks all fell simultaneously. Kolon Mobility Group and Hyosung O&B's stock prices plunged 22.7% and 19.3%, respectively, on the most recent trading day, the 20th. Bankware Global also dropped 17.8%.

On the 19th, Speaker Woo responded to the possibility of running in the next presidential election by saying, "I have not thought about it yet," which appears to have influenced the stock prices. Prior to this, Kolon Mobility Group's stock price surged 82.4% over four days from the 16th to the 19th. This rapid rise occurred immediately after news spread that Woo's credibility had sharply increased following the 12·3 Emergency Martial Law incident. The stock price plunged in a single day as disappointed sellers flooded the market after investors had gathered in anticipation of Woo's presidential candidacy. On stock-related forums, posts continue to express hope for a rebound, stating that the possibility of Woo's presidential run still remains.

The stock price volatility of Orient Precision, considered a theme stock for Lee Jae-myung, leader of the Democratic Party of Korea, has also increased. Orient Precision's stock price surged 492.4% over eight trading days from the 4th to the 13th, hitting the upper limit price on six of those days. Subsequently, profit-taking sales emerged, increasing price volatility. The stock price, which had risen to 7,560 won, fell to 4,960 won within three days.

Following the martial law incident, stocks such as Koiz, Estaco, and Wise I-Tech, which had ridden the political theme wave, plunged 35.9%, 28.9%, and 27.5% respectively over one week. Koiz's stock price rose 183.3% over six trading days from the 4th to the 11th. Many investors are believed to have incurred losses amid the rapid rise and subsequent sharp fall.

A financial investment industry official explained, "Volatility in political theme stocks is expected to continue until the Constitutional Court makes a decision following the passage of the impeachment motion," adding, "They can repeatedly surge and fall depending on approval ratings." However, he added, "Theme stock prices are unpredictable, making them high-risk investments."

Even looking at the flow of theme stocks during past presidential election periods, it is clear that such investments do not have a high success rate. According to the Capital Market Research Institute's February 2022 publication, 'A Study on the Phenomenon of Political Theme Stocks in the 20th Presidential Election,' political theme stocks in the 20th presidential election also showed sharp fluctuations in stock prices depending on the rise and fall of related candidates' poll ratings and political events.

Nam Gil-nam, senior researcher at the Capital Market Research Institute, explained, "The rapid price surge of political theme stocks generally does not last," adding, "The phenomenon of political theme stocks, which are essentially unrelated to corporate value, commonly showed a tendency for stock prices to fall as the election day approached, as observed in past presidential election cases."