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FSS to crack down on rumors surrounding political stocks

Nov. 30, 2016 - 16:15 By 송수현

South Korea’s financial watchdog will enhance its monitoring of changes in stocks linked to political figures over the next three months, amid growing uncertainty about President Park Geun-hye’s term in office.

The Financial Supervisory Service said Wednesday it would more closely monitor online postings, messages via mobile messengers and other social networking sites for rumors concerning about 60 publicly traded stocks.

“For the particular stocks, uncertainties have been spiking regardless of market conditions since August,” the FSS said in a statement. “Rumors are expected to circulate more widely ahead of the next presidential election.” 

According to the watchdog, the average volatility rate -- the gap between the maximum and minimum values of the share price -- has been 32.3 percent for the period since April for these political stocks. That compares to the benchmark Kospi’s 7.5 percent and tech-heavy Kosdaq’s 16.1 percent over the same period.

After the president’s third statement on the ongoing scandal on Tuesday, stocks linked to Moon Jae-in, former leader of the Democratic Party of Korea and President Park’s campaign rival in the 2012 election, rallied as much as 7 percent.  

Among those stocks are Wooridul Pharmaceutical and Wooridul Life Sciences, whose largest shareholder is the wife of the doctor of the late President Roh Moo-hyun. Moon had served as Roh’s chief secretary. However, they tumbled more than 2 percent on Wednesday. Most of the stocks linked to Moon are related to personal associates of the politician.

Daishin Information Communications, a stock linked to Yoo Seong-min of the ruling Saenuri Party soared around 6 percent on Tuesday, but lost about 5 percent following day. Daishin’s stocks have been linked to the reformative lawmaker because the current CEO is Yoo’s fellow alumnus from the University of Wisconsin.

The FSS advised investors to be cautious of stocks whose transactions surged for no particular reason. 

“Spreading false statements or rumors (even without attention to affect shares) can result in fines during the crackdown period,” the watchdog warned. “As soon as the FSS collects evidence related to the acts, the watchdog will investigate the cases in partnership with the Financial Services Commission and Korea Exchange.”

By Song Su-hyun (song@heraldcorp.com)