With the KOSPI index on the verge of 5,000 points and extending its rally, the number of stocks that have become so-called "emperor stocks" (shares priced above 1 million won) increased from the same period a year earlier. In particular, as the market surged last year, emperor stock prices that topped 1 million won per share rose further.
In Korea's stock market, once a share price tops 1 million won and a stock becomes an emperor stock, the so-called "curse of emperor stocks," in which prices later fall, has often occurred. Recently, however, as the market shows an unusual bout of strength, the old jinx appears to have lost steam.
According to the Korea Exchange (KRX) on the 21st, as of the day's close, five stocks finished above 1 million won per share: Hyosung Heavy Industries (2,319,000 won), Samsung Biologics (1,873,000 won), Korea Zinc (1,657,000 won), Hanwha Aerospace (1,315,000 won) and Samyang Foods (1,200,000 won).
There are also 10 stocks priced above 500,000 won per share: HD Hyundai Electric, Doosan, Taekwang Industrial, SK hynix, HD Hyundai Heavy Industries, Samsung Epis Holdings, Hyundai Motor, LIG Nex1, Rainbow Robotics and LS Electric. Although prices have since fallen, Doosan and Taekwang Industrial at one point topped 1 million won late last year.
Compared with the same period last year, the number of emperor and quasi-emperor stocks has increased. In early last year, when the KOSPI was in a downturn, the only emperor stock was Samsung Biologics. Only three stocks—Korea Zinc, Samyang Foods and Taekwang Industrial—were priced above 500,000 won per share.
Since June last year, as the domestic market gradually gained momentum, the number of emperor stocks began to grow. Four names—Samyang Foods, Hyosung Heavy Industries, Hanwha Aerospace and Doosan—newly joined the ranks. Hyosung Heavy Industries traded around 400,000 won early last year, but surged 477% through this month to become a "super emperor stock" above 2 million won per share. It is the first time a share price has topped 2 million won since Korea Zinc, which saw an intense management control dispute.
Notably, most of the names that became emperor stocks in last year's rally avoided the "curse of emperor stocks." The curse refers to cases in which, after topping 1 million won, corporate value deteriorates or the share price plunges.
In 1999, for the first time in Korea's market history, SK Telecom became an emperor stock, and shares of Korea Information & Communication, Daum Communications and Saerom Technology also all topped 1 million won, but the following year the "information technology (IT) bubble" burst and prices collapsed rapidly. NCSOFT likewise became an emperor stock in Jan. 2021, but after multiple game flops the share now languishes in the 200,000-won range, and LG H&H also has not regained its former emperor-stock glory.
Some analysts say that a 1 million won share price is perceived by investors as too high, reducing trading volume, and that prices react more sensitively to bad news than good news, leading to the "curse of emperor stocks."
However, in the recent bull market, this rule has not been in effect. Four of the five emperor stocks have risen further since the second half of last year.
Compared with Oct. 27 of last year, when the KOSPI closed above 4,000 for the first time ever, Hyosung Heavy Industries is up 21%. Samsung Biologics (55%), Korea Zinc (49%) and Hanwha Aerospace (27%) also gained. Samyang Foods, however, fell 5% over the same period due to weak earnings.
Experts say the rise in these emperor stocks stems from improved earnings. In the securities industry, Hyosung Heavy Industries has a target price as high as 3 million won, and there are projections that Hanwha Aerospace could top 1.8 million won.
Still, there is advice to watch turnover when investing in emperor stocks. Because of their high prices, trading volume is not heavy. Most emperor stocks trade fewer than 100,000 shares a day. By volume relative to listed shares, Hyosung Heavy Industries is at 0.51%, Samsung Biologics 0.13%, Korea Zinc 0.39%, Hanwha Aerospace 0.51% and Samyang Foods 0.84%.
A person in the financial investment industry said, "Emperor stocks have high prices per share, so trading volume can be sluggish," and added, "For institutional investors, the per-share price may matter less, but in Korea's market, where individual investor participation is high, the absolute price unit can have an impact."