"The major shareholder sold again"
As soon as the disclosure window opened today, a familiar list of corporations appeared. The previous day (23rd), several instances of stock sales by major shareholders of politically themed stocks were reported. After the market closed, KONA I announced the exercise of stock options (which would likely have been exercised to sell shares), and Xperix reported stock sales by a major shareholder. It turned out that the controlling shareholder of 4BY4 also disposed of nearly 80% of their shares. All of these are politically themed stocks that significantly rose in value linked to certain politicians.
With the presidential election a month away, the stock prices of corporations related to prominent candidates or pledges surged, prompting major shareholders and executives to take the opportunity to sell their stocks. This is a familiar scene repeated every election cycle.
Recently, eight key officials of DSC Investment, whose stock surged due to being labeled as a "Lee Jae-myung themed stock," sold shares and converted it into hundreds of millions of won in cash. KONA I and Dongsin Construction also saw their representatives and relatives significantly sell shares to realize profits. Despite improvements in performance being unrelated, stock prices soared simply due to connections with politicians, leading executives to perceive this as a once-in-a-lifetime "jackpot" opportunity.
Such insider sales are perceived in the market as a "top signal." Following the announcement of sales by major shareholders or executives, the stock prices of those issues are likely to plummet. In the case of DSC Investment, the stock price fell by more than 11% the day after the news of an executive's sale was reported. While insiders realized profits at the peak, individual investors who jumped in late are left holding losses, creating a repeating structure. Those who are well-informed understand that insiders, who know there will be no actual benefits, will always be one step ahead of individual investors.
Announcements of equity sales are easily overlooked by individual investors who are not familiar with the disclosure system. Convertible bond (CB) conversion requests and bond warrants (BW) exercises are difficult for individuals to track. Furthermore, most of this news is quietly reported only via disclosures, primarily after the regular market closes.
Amid the political themed stock frenzy, the KOSDAQ market has been described as experiencing an "awkward heyday." In April (from April 1st to April 23rd), KOSDAQ trading volume reached 16.5 billion shares, a 68.3% increase compared to the same period the previous month (9.8 billion). Since most corporations classified as politically themed stocks are small-cap KOSDAQ listed companies with lower assets and sales, the turnover among investors has significantly increased.
Political themed stocks are always temporary. In past presidential elections, there have been numerous cases of disguising affiliations with politicians as executives or spreading unfounded rumors to artificially inflate stock prices.
The Korea Exchange urged investors to refrain from following transactions of stocks that experience rapid price and trading increases based solely on unverified rumors or vague expectations, which was stated on the 23rd.
However, considering that individual investors are still actively seeking political and policy themed stocks, there are concerns that the "hot potato" game of passing the burden between those already caught and those who will be caught before the materials run out before the early presidential election on June 3rd will continue.