The stock price of No Brand, listed on the KOSDAQ market, surged to 9,730 won during trading on the 23rd of this month. This was 25% (1,950 won) higher than the previous closing price of 7,780 won. However, the stock price then drew a downward curve and closed at 7,990 won the following day.
There were evaluations that the surge in No Brand's stock price was due to confusion with the private brand (PB) 'No Brand' of Emart. This was because Chung Yong-jin, chairman of Shinsegae Group, had met with U.S. President-elect Donald Trump, and the stock prices of the group companies rose sharply at that time. However, the listed company No Brand is not part of Shinsegae Group; it is a company that exports clothing products made for famous North American retailers like Target and Walmart, as well as fashion brands like Gap.
It is common for investors to misinterpret company names, leading to sudden stock price fluctuations. Similar incidents occurred this year, likely due to a concentration in thematic stocks amid a sluggish stock market, which resulted in frequent 'speculative investments.'
According to the financial investment industry on the 25th, the stock with the highest price increase in the domestic stock market this month is Orient Precision. Orient Precision's stock price soared 415% (4,569 won), rising from a closing price of 1,101 won on the 29th of last month to 5,670 won the previous day. Orient Bio also saw a stock price increase of 157.8% (751 won) during the same period.
Both stocks were linked to the theme of Lee Jae-myung, leader of the Democratic Party. This was because Lee had once worked at Orient Watch in the past. The stock price of Oriental Precision also fluctuated sharply due to the similarity of the name. On the 10th, when Orient Precision hit the upper limit of the daily price, the stock price of Oriental Precision rose more than 7%.
Despite the similarity in names, Orient Precision and Oriental Precision are separate companies. Orient Precision, based in Gumi, North Gyeongsang Province, is an automobile parts manufacturer. Oriental Precision, headquartered in Busan, specializes in ship cranes. It is curious that Orient Precision's stock price surged merely because of Lee having worked at Orient Watch, but it is even stranger that Oriental Precision's stock price jumped.
There have been several cases this year where companies with similar names saw their stock prices rise and fall together. On June 5th, Korea Oil's stock price surged to 28,100 won during trading, hitting a new high in the past year. This occurred in anticipation of a visit from Vitor Abreu, an advisor from the U.S. deep-sea analysis company ACT-Geo, which was analyzing the potential for large-scale oil and gas deposits in the waters off Pohang. However, Korea Oil is a company engaged in asphalt businesses and is unrelated to Korea National Oil Corporation.
Samsung Air Conditioning also saw a spike in stock price in June. This happened when Samsung Electronics announced plans to expand its heating, ventilation, and air conditioning (HVAC) business in line with the growth of the artificial intelligence (AI) data center market. Although Samsung Air Conditioning is not part of the Samsung Group and its main business is also HVAC for automobiles, its stock price soared from below 10,000 won to 20,700 won.
In September, during the management rights dispute at Korea Zinc, the stock prices of Young Poong Group companies such as Young Poong and Young Poong Precision rose in succession, and Young Poong Paper recorded a daily stock price increase of over 20%. Although Young Poong Paper is not part of Young Poong Group, it surged in price simply because the name contains Young Poong.
Instances of investors mistakenly investing based only on company names have been repeated over a long period. In 2020, when the stock price of Shinpoong Pharmaceutical surged, the unrelated Shinpoong Paper (now Shinpoong) saw a rise in stock price as well. In 2022, when the embezzlement case of Osstem Implant arose, an unrelated Osstem suffered a setback.
Other examples of mistaken investments due to similar names include ▲ Dongwon Industries - Dongwon Fisheries ▲ Samyang - Samyang Foods ▲ Samchuly - Samchuly Bicycle ▲ Hanmi Pharmaceutical - Hanmi Global.
The act of purchasing stocks based on name confusion involves individuals. Only individuals exhibited a buying advantage during the periods when No Brand, Oriental Precision, Korea Oil, and Samsung Air Conditioning experienced rapid stock price increases. Institutions and foreigners sold off their shares. Moreover, the stocks that surged suddenly returned to their original prices in as little as two trading days and at most one month.
The financial investment industry points to the psychology of attempting to ride the wave of rapidly increasing stock prices as the background for repeated individual misinvestments. Experts consistently advise that investors should always understand "what type of business the company is engaged in" before investing.