[Inside Chodong] Retail Investors Lose Sleep All Weekend

Political Theme Stocks Show Diverging Trends in After-Hours Trading
Behind the “Jackpot”: Cases of Heavy Losses Among Investors

Political theme stocks have been rampant in the domestic stock market for several consecutive days. Volatility has increased for listed companies associated with political themes, and the number of individual investors incurring losses is also rising. The Financial Supervisory Service has expanded its special task force to detect unfair trading related to political theme stocks at an early stage. However, whenever issues related to an early presidential election arise, there is a lack of both manpower and time to investigate all the theme stocks experiencing sharp price swings. Ultimately, individual investors have no choice but to recognize the risks of investing in theme stocks for themselves. Last weekend, although the attempt to replace the People Power Party's presidential candidate ended in failure, theme stock investors had to endure an unforgettable nightmare.

Even after the regular market closed on Friday, the 9th, investors continued to pay close attention to political news. Late in the afternoon, the Seoul Southern District Court Civil Division 51 dismissed the injunction filed by Kim Moonsoo, the People Power Party's presidential candidate, seeking recognition of his candidacy status against the party. In after-hours trading on the 9th, Icecream Edu and Daehanbangjik, stocks related to former Prime Minister Han Ducksoo, soared to their price limits. In contrast, stocks related to candidate Kim, such as Pyeonghwa Holdings and Pyeonghwa Industry, fell to their price limits.

The People Power Party leadership began the candidate replacement process on the night of the 9th. At midnight on the 10th, through meetings of the emergency response committee and the election management committee, the party revoked candidate Kim's eligibility. They then conducted an automated response (ARS) vote among party members to decide whether to replace the presidential candidate with former Prime Minister Han.

On stock discussion boards, posts mocking holders of stocks related to candidate Kim continued to appear. There was growing consensus that Pyeonghwa Holdings would immediately hit the lower price limit when the market opened on Monday, the 12th. Some investors commented, "It seems wise that I sold in after-hours trading even at a loss."

After checking the ARS voting results at 11 p.m., the emergency committee announced that many party members opposed the replacement. The replacement proposal was rejected, and candidate Kim regained his presidential candidacy. The mood on the stock message boards also shifted. Investors who bought Icecream Edu in after-hours trading on the 9th suddenly found themselves worrying about losses within a single day. Investors in Pyeonghwa Holdings, who had feared a plunge to the lower limit on Monday, are now expecting to make a profit.

On the stock discussion boards for stocks related to Lee Jaemyung, the Democratic Party presidential candidate, sentiment remained relatively calm throughout the weekend. As internal strife within the People Power Party increased Lee's chances of winning, investors expect an upward trend. However, since Sangi Construction fell nearly 7% in after-hours trading on the 9th, it is likely that stock movements will diverge even among those related to candidate Lee.

With the early presidential election scheduled for June 3, interest in political theme stocks in the stock market is bound to grow even further. As price volatility increases, some stocks may surge in a short period, while others may plummet. A stock may rise in the morning and then plunge in the afternoon, or a stock that hit the upper limit one day may reverse and fall the next day. Increased volatility means a higher probability of losses.

Investors who traded theme stocks even in after-hours sessions could not rest comfortably at home throughout the weekend. Responsibility for investment ultimately lies with the individual. Once an investor gets involved in theme stocks, it is difficult to get out. Even after making a profit and selling, they spend busy days searching for new theme stocks to invest in. Eventually, after suffering significant losses, they continue investing in theme stocks in hopes of recovering their principal.