Firms deny ties with presidential contenders

By Nam Hyun-woo

A number of firms rumored to have relations with presidential contenders are actively denying this in an apparent bid to prevent their stock prices being swayed by the looming presidential election.

Barunson, a major writing tool and notebook manufacturer, said in a regulatory filing Friday that the company “has no relations with former Democratic Party of Korea leader Moon Jae-in that would affect the firm’s stock price and trading volume.”

On the same day, four other companies labeled as “Moon Jae-in themed stocks” followed suit to deny any ties with Moon, who has been in the lead in presidential election surveys.

In Korea, shares of companies tend to rise once they are on the lips of analysts or investors as having something to do with influential politicians ahead of the presidential election, possibly due to the belief that they will get special treatment from the potential future leader.

Last month, other companies also issued similar filings without requests from the Seoul bourse. On Feb. 16, SG Choongbang, a textile company, denied hearsay it was connected to South Chungcheong Province Gov. An Hee-jung, who is also a presidential hopeful.

The moves are in stark contrast to previous behavior ― companies used to react passively and come up with its official stances only after getting requests from the bourse operator.

Experts say that companies’ active responses are aimed at preventing severe fluctuation in their stock values.

“The belief that a company is a politically themed stock associated with a specific presidential bidder sends its share prices onto a rollercoaster ride,” an official at the Korea Exchange (KRX) said.

According to KRX analysis of 16 themed stocks from September to November last year, their prices faced ups and downs in the short term but plunged over the long term. During the period, their Nov. 30 prices were about 35 percent lower than their peaks on average.

“Obviously, management does not want to see this happen,” the official said. “During the election period, the KRX will beef up monitoring and crackdown on unfair trading regarding such stocks.”

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