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| Dealers at Hana Bank work in a dealing room at the lender's headquarters in Seoul, Wednesday morning. Yonhap |
Watchdogs launch investigation into suspicious stock price movements
By Lee Min-hyung
Six stocks listed in the Korean stock market have plummeted in value for three consecutive trading days with no apparent reason amid growing suspicion of price manipulation.
Shares of Samchully, Daesung Holdings, Seoul Gas, Sebang, Sun Kwang and Daou Data extended losses of more than 20 percent on Wednesday after suffering double-digit falls during the two previous trading sessions, according to data from the Korea Exchange.
They all have one thing in common: some investors engaged in a mass selling spree of the stocks via France-based Societe Generale (SG) on April 24. The abrupt stock price falls created a climate of fear among retail investors, resulting in the continuously sharp decline of the aforementioned stocks until Wednesday. Most of the shares ended with a loss of around 30 percent ― the lower limit of daily stock fall.
Shares of Harim and Daol Investment & Securities ― which did not extend the sharp fall on Wednesday ― also suffered serious losses for the past two trading sessions due to a similar reason. The combined market capitalization of the eight shares dropped by more than 4 trillion won ($3 billion) in only four trading days.
But no concrete reasons behind the abrupt fall of the stock prices have been revealed so far.
Korea's financial authorities launched an investigation into the stock price drops. The heads of the Financial Supervisory Service (FSS) and the Financial Services Commission (FSC) held a meeting on Wednesday afternoon to discuss suspicions of insider trading and price manipulation.
"We will launch a swift investigation into the stocks suspected of unfair trading and take stern measures against those involved in any illegalities," FSS Governor Lee Bok-hyun said. Singer Lim Chang-jung also claimed he fell victim to the latest incident with a loss of around 3 billion won.
Regulators also slapped a foreign travel ban on a group of 10 people suspected of the stock price manipulation activities.
The scandal also impacted overall stock market sentiment here. The benchmark KOSPI fell below the psychologically-important 2,500 level on Tuesday and also displayed lukewarm performance the following day.
The secondary Kosdaq ― which achieved an unprecedentedly solid rally in the first quarter ― lost momentum as well on weakening investor sentiment. The Kosdaq recently topped 900 points, but ended up extending a losing streak for the past few trading days amid widening fears of the recent scandal.
