ID :
205738
Wed, 09/07/2011 - 11:00
Auther :

(LEAD) Watchdog to probe stock price rigging backed by 'celebrity effect'

(ATTN: UPDATES with share closing prices in paras 2, 4)
SEOUL, Sept. 7 (Yonhap) -- South Korea's financial watchdog said Wednesday that it plans to launch a probe into what it calls "speculative" movements on the local stock market as some stocks tied to celebrities or key politicians surged sharply.
Shares of Ahnlab Inc., a software firm founded by Ahn Cheol-soo, zigzagged over whether he would run or not for Seoul mayor. The company's stock dropped by the daily limit to close at 40,750 won (US$38.03) on the main Seoul bourse Wednesday, a day after Ahn pledged not to run and instead threw his support behind leading liberal activist Park Won-soon.
Between Sept. 1-6, Ahn, who had been widely favored for the post, had seen the company's stock gain more than 35 percent as investors clamored for shares on speculation that the firm would benefit if he ran.
Ahn held a 37.1 percent stake in the company as of end-June.
In contrast, shares of Pulmuone Holdings Co., where Park serves as an outside director, surged by the daily limit to close at 47,650 won on Wednesday, a day after Ahn's announcement.
"We are looking into sudden rises in shares (to prevent cases of stock price manipulation)," an official at the Korea Exchange (KRX) said. "Ahn Cheol-soo-related shares have risen sharply in recent sessions. We are monitoring such shares on a daily basis."
"If we feel that a certain group of investors is attempting to manipulate stock prices, we will step up our investigation," he said.
So-called "celebrity shares," usually related to stars or politicians, have become household names among retail investors wishing to cast their bets through stock purchases. Such investors usually just chase these shares based on "star value" rather than their true value or market fundamentals.
Market insiders and analysts said that the "celebrity effect" could be a vehicle for speculative movements on the stock market.
In contrast to retail investors' high interest, some market watchers have stayed cool about the sudden surge in those shares.
No local brokerages have issued reports on Ahnlab, with the exception of small published notes that speculate the recent surge in the venture firm's shares was likely due to Ahn's possible emergence as a Seoul mayoral candidate.
"The abnormal movement of such shares in South Korea is much more volatile compared to those in other countries. Although we are stepping up education for investors, it seems difficult to tackle the issue," another KRX official said.
A high-ranking official at the Financial Supervisory Service also agreed.
"Most of the share price soars in theme shares last for a short time rather than few weeks. Investors need a prudent approach in purchasing those shares," he said.

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