As volatility in the stock market has widened due to the war between the United States and Iran, concerns are growing over overheated investing as certain refinery theme stocks have surged more than 120%. Experts said speculative trading, riding the spike in oil prices, is running rampant and urged caution.
According to the Korea Exchange (KRX) on the 9th, from the 3rd to the 6th, some stocks classified as refinery theme stocks showed a steep rise. In particular, KIM ANKOR Oilfield Overseas Resources Development Fund's share price soared 127.91% in a week, ranking No. 1 in gains on the main board. Hung-gu Oil and Joong Ang Enervis also jumped 56.73% and 49.95%, respectively, placing them among the top gainers on KOSDAQ.
The problem is that some stocks are surging simply because they are tied to the "petrochemical" keyword, regardless of earnings. KIM ANKOR Oilfield Overseas Resources Development Fund, which is set to be delisted next month, already sold 80% of its oilfield equity in 2022 for $47 million (about 64.1 billion won), making the possibility of further revenue recovery slim.
The situation for Hung-gu Oil is more serious. Based on provisional 2025 results, earnings per share (EPS) is 12 won, and applying that to the closing price that day (27,950 won) yields a price-earnings ratio (PER) of a staggering 2,329 times. In other words, the stock is trading at more than 2,300 times one year's profit.
Yoon Jae-sung, an analyst at Hana Securities, said, "Even if they are rising together under the label of refinery stocks, among them are corporations for which higher oil prices do not affect earnings," and added, "Because prices are rising regardless of corporate fundamentals, caution is needed about money flowing into such corporations."
Hwang Gyu-won, an analyst at Yuanta Securities Korea, said, "Investors expecting either an early end or a prolonged phase of the Middle East crisis are mixed together, leading to wavering judgments," adding, "It can be interpreted as a form of overreaction in the market."
As signs of overheating appeared in the share prices of some refinery-related theme stocks, the Korea Exchange (KRX) also issued warnings. KIM ANKOR Oilfield Overseas Resources Development Fund and Hung-gu Oil have been designated as investment warning issues under the market alert system since the 6th. Korea Oil and Kukdong Oil & Chemicals were also designated as investment caution issues for one day on the 5th. The market alert system is a framework in which the Korea Exchange (KRX) gives advance notice of risk in three stages—caution, warning, and risk—for issues with potential for speculative or unfair transactions or with abnormally sharp price rises.
Lee Hyo-seop, a senior research fellow at the Korea Capital Market Institute, said, "As the influence of social media (SNS) expands, during sharp declines or correction phases in the market, investing tendencies focused on theme stocks unrelated to earnings are becoming frequent," and advised, "Theme stocks that surge in the short term often see their prices fall six months or a year later, so they should be approached with caution from a long-term investment perspective."
Lee said, "Many individual investors who failed to buy Samsung Electronics and SK hynix are flocking to theme stocks due to 'FOMO (fear of missing out),'" adding, "It is necessary to invest after looking at basic financial statements or valuation indicators such as PER and PBR to see whether actual revenue is being generated and sales are increasing."