Investor Alert ! Politically-themed Stocks

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Hello, our readers. This is Frank.

I guess some of you guys are busy adapting to a new semester. However, don’t worry guys. Fortunately, we have plenty of time to enjoy this beautiful spring and hang out with our friends! Now, today’s topic I’d like to introduce is political theme stock.

테마주3 Do you have any idea of what ‘theme stock’ is? To put it simple, theme stock is a kind of stock which follows a particular theme. People tend to pay attention to newly occurred events and this can also be applied to stock market. When there’s a big issue which can heavily influence the stock market, investors become interested in the certain theme so that the stock related to the theme takes an upturn. This theme can come from various fields such as political, economic, social, and etc.

Then, figuring out what political theme stock is turns out to be simple. Especially, in Korea, there has been a presidential election and political theme stocks that are directly or indirectly linked to presidential candidates have all gone through severe fluctuations. For example, after the election of Park Geun-hye as a president, Park-themed stocks have surged drastically.

In fact, in most cases, those who systematically manipulate share prices through exploiting political trends make the dramatic ups and downs of such politically-themed stocks. Therefore, the financial authorities announced that they will take enforcement action against illegal acts in order to relieve the unsettled economic situation and protect individual investors.

For your easier understanding, let’s take a look at those regulatory actions in three categories.

  1. Operate a new special theme stock investigation team and a joint taskforce monitoring on rumors.
    – Forming a new special theme stock investigation team: investigating market-manipulating activities jumping on theme stocks and inappropriate transactions related to North Korea rumors.
    – Continuing running a joint rumor-monitoring taskforce
  2.  Consolidate cooperation with investigation agencies.
    The National Police Agency would immediately start an investigation into intentionally-spread rumors upon a request from the financial authorities.
  3. Strengthen prevention activities.
    The investigation into theme stocks would be disclosed through the media to help individual investors to understand the truth of theme stocks.

테마주2

So, for possible stock-investors, here are some useful tips.

  1. Stocks in the upward trend are dangerous since they are directly linked to sudden downward trend as well.
  2. Make sound investments based on the fundamentals.
  3. Check investing information at Korea Exchange before making an investment.
  4. Don’t hesitate to report unfair trading practice to Korea Exchange Stock Watch Center.

Seung-hye Shin (seunghye312@gmail.com)

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