Jinyang Chemical hits upper limit, rising about 30%, on Korea University alumni link to Oh

Stocks tied to losing Democratic Party candidate tumble after defeat confirmed

Short-term flows driven by personal ties and policy hopes, not business fundamentals

Oh Se-hoon, the People Power Party's Seoul mayoral candidate, speaks to supporters at his campaign office in Jongno-gu, Seoul, on Thursday — the day after the ninth nationwide simultaneous local elections — as his victory became all but certain. [Yonhap]
Oh Se-hoon, the People Power Party's Seoul mayoral candidate, speaks to supporters at his campaign office in Jongno-gu, Seoul, on Thursday — the day after the ninth nationwide simultaneous local elections — as his victory became all but certain. [Yonhap]

Political theme stocks swung sharply on the Korean stock market Thursday after the Seoul mayoral race in the June 3 local elections was called. Shares grouped under the so-called "Oh Se-hoon theme" rallied in early trading following the People Power Party candidate's victory, while stocks linked to Democratic Party of Korea candidate Jeong Won-o tumbled once his defeat was confirmed.

However, analysts note that many of these stocks were bundled together on the basis of alumni ties, regional connections or past policy associations — links that are difficult to connect to actual corporate value.

As of 10:50 a.m. Thursday, Jinyang Chemical hit the daily upper limit, rising about 30% from the previous session to 2,045 won, according to Korea Exchange data. Jinyang Industries also climbed 19.83% to 5,800 won. Both stocks have repeatedly been cited as Oh-linked plays during past election cycles.

The two companies were grouped into the Oh theme after it became known that Yang Jun-young, vice chairman of Jinyang Holdings, is a Korea University alumnus of the mayor-elect. Both stocks tumbled in tandem in April when Oh announced he would not run in the presidential election, underscoring how personal connections to a politician — rather than actual business performance — can drive share price moves.

Nuriplan, which operates urban landscape and decorative lighting projects, also gained during trading on the back of Oh's past "Design Seoul" policy record. Hanil Chemical was added to the theme stock list because one of its outside directors attended Shinil High School and Korea University alongside the mayor-elect. Analysts say these moves reflect election-season sentiment rather than any confirmed policy benefit or earnings improvement.

Stocks tied to Jeong, by contrast, fell sharply. SJ Group plunged about 29% at the same time. Daejoo Industrial dropped 11.09% to 2,125 won, and PStech fell 14.71% to 5,800 won.

The rationale for grouping those stocks with Jeong was similarly thin on business substance. SJ Group was classified as a Jeong-linked stock because it operates the mixed-use cultural complex LCDC Seoul in Seongsu-dong, Seongdong-gu. Daejoo Industrial was cited because its chief executive shares the Gyeongju Jeong clan name with the candidate, while PStech was included simply because its headquarters is in Seongdong-gu, Jeong's political base.

Political theme stocks tend to see volatility spike around the time election results are confirmed. Non-financial factors — polling, campaign pledges, and alumni, regional or family ties — repeatedly serve as trading catalysts before elections, only to collapse once the vote is over and the narrative disappears.

Financial regulators have repeatedly warned investors about the risks of political theme stocks. The Financial Supervisory Service has said it will closely monitor stocks that surge abnormally, cases where major shareholders sell large blocks of shares, and stocks where convertible bonds are being converted, citing concerns about unfair trading and investor harm during periods of overheating. Securities industry analysts caution that political theme stocks tend to move on investor sentiment rather than corporate fundamentals, and warn against chasing rallies.


kacew@heraldcorp.com