AhnLab shares plunge on founder's political defeat

The Korea Times

The Korea Times

Finance

Tue, September 26, 2023 | 08:50

Companies

AhnLab shares plunge on founder's political defeat

Posted : 2023-03-09 16:06

Updated : 2023-03-10 11:52

Rep. Ahn Cheol-soo of the ruling People Power Party, right, shakes hands with Rep. Kim Gi-hyeon following the results of a vote to choose the new leader of the party, at KINTEX exhibition center in Goyang, Gyeonggi Province, March 8. Joint Press Corps-Yonhap

By Lee Min-hyung

Shares of AhnLab, a security software company, reported a double-digit price decline, Thursday, after Rep. Ahn Cheol-soo suffered a crushing defeat in the race for leadership of the ruling People Power Party (PPP). Ahn is the founder and the largest shareholder of the company.

AhnLab shares started trading with the huge fall reflecting investors' disappointment in the overnight election result. The stock price of the company closed at 64,300 won, down 12.75 percent from the previous session.

The firm's share price soared to around 97,000 won in early February on hopes that Ahn would become the party leader. But that sentiment lost steam rapidly as the possibility of his election win weakened. According to the vote results, Kim Gi-hyeon, the newly elected chairman of the party, won 52.93 percent of the ballots, while Ahn ended up securing only 23.37 percent.

AhnLab's share price has been swayed by its founder's political ups and downs after he debuted as a candidate for Seoul mayor in 2011. Ahn owns 18.57 percent of AhnLab.

Experts advise investors to exercise caution before making investments in politically themed stocks.

"Politically themed stocks soar irrationally from time to time during election periods and plunge shortly afterwards," said Nam Gil-nam, a senior research fellow at the Korea Capital Market Institute. "Investors are advised to continue exercising caution on such stocks."

Other Ahn-themed stocks, such as Sunny Electronics, also experienced similar double-digit falls on the same day. The company's stock price has shown a curve similar to AhnLab's, as one of Sunny's executives once worked for the security software company. The stock price also fell for Korea Information Engineering Services, classified as being linked to Ahn.

But stocks linked to Kim also plunged. NAMUTECH shares extended losses on the same day despite Kim's victory. The firm's stock price fell by around 8.12 percent from the day before. The cloud computing solutions provider has become a representative politically themed stock simply because its auditor studied at the Judicial Research and Training Institute with Kim.

Other Kim-themed stocks, such as Brand eXperience Corporation, did not display robust rallies the day after the election result was announced.

mhlee@koreatimes.co.kr