"The reason the stock price skyrocketed 195%? Because it's the same name?"... Theme investors wandering in chase of memes [The World of Ants]

[Financial News]"I came here because Yong Hye-in was on the news. I invested 5 million for now."Over the course of just a few days, the name of Yong Hye-in, the nominee for Minister of Gender Equality and Family, was mentioned several times in the stock discussion forum of the KOSPI-listed company Hyein. Among investorsThe sudden 'Yong Hye-in themed stock' memeThe reason this appeared was solely because the name of the listed company, Hyein, and the name of candidate Yong were the same.
Hyein, which had recorded the highest growth rate on the KOSPI with a 195% surge until the 28th of last month, coincidentally began to decline on the following trading day after Candidate Yong was nominated as a ministerial candidate on the 30th of last month.

According to the Korea Exchange on the 3rd, Hyein's stock price was in the low 4,000 won range as recently as the end of July, but it rose sharply last month. However, it subsequently plummeted for three consecutive trading days until the 2nd, falling to 9,520 won, before closing at 10,650 won on the 4th, up 880 won (9.01%) from the previous day.
Judging solely by the content, it appeared that the factors behind Hyein's sharp rise and fall were connected to the nomination of Minister Yong.
 
However, last monthThe actual reason for the surge in Hyein's stock price is the expectation of increased demand for emergency generators due to the expansion of artificial intelligence (AI) data centers.Hyein is the official domestic dealer for the global construction and mining equipment manufacturer Caterpillar and operates an engine and generator business. It also has a history of supplying Caterpillar emergency generators to major data centers, including Samsung Electronics, SK, Naver, and Kakao.
The performance results were also enough to raise expectations. Hyein’s operating profit for the first half of this year was 8.4 billion won, a 58.7% increase from the same period last year. In particular, the operating profit in the power generation energy sector rose by 62.3% to 5.5 billion won. Furthermore, Hyein announced earlier this year that it would expand investment in the engine and generator business sectors to keep pace with the increase in ultra-large data centers driven by the spread of AI and the growing demand for maintenance, repair, and overhaul (MRO) in the defense industry.
However, as the stock price jumped nearly threefold in less than a month, the burden increased, and the stock turned downward after being designated as a short-term overheated stock on the 11th of last month and then as an investment warning stock on the 18th. On the 1st, a public announcement was also made regarding the impending re-designation as an investment warning stock.
The securities industry analyzed that the reason for Hyein's sharp decline was that short-term profit-taking selling pressure poured in as the stock price rose faster than the pace of fundamental improvements, such as earnings or new orders.To summarize, there was no relationship between Hyein's stock price fluctuations and Candidate Yong.Above all, no connection whatsoever, such as business or equity ownership, was confirmed between Hyein and Candidate Yong. Simply because they shared the same name, they became a kind of 'meme' and were consumed as political theme stocks.
Even before the case of Candidate Yong, there were frequent instances where stock prices surged after being classified as "politician-themed stocks" simply because individuals were alumni or shared the same clan origin as specific politicians. Whenever a particular issue came to the forefront, stocks grouped solely by name or narrative would repeatedly experience sharp fluctuations.



What is interesting is that there was actually a case where a stock price skyrocketed after becoming a 'theme stock meme' simply because it shared the same name. In August 2017, as Typhoon Noru approached, it was predicted that stocks related to flood recovery would rise. However, the stock that actually surged in the market was, unexpectedly, Noroo Paint. The stock price of 'Noroo Paint Preferred Stock' rose from a low of 8,400 won on August 1 of that year to a high of 14,800 won on the 4th, achieving a phenomenal 76.19% increase in just four days.
As Noroo Paint became a hot topic due to its stock price skyrocketing in an instant, online communities at the timeIs the reason Noroo Paint's stock price rose because it shares the same name as Typhoon Noru?A question was raised, and a string of answers followed stating, "That reason is correct." Although there was no logical connection between the typhoon and the paint company, buying continued simply because they shared the same name.
The sudden 12.21% surge in the stock price of domestic toy manufacturer Son O Kong on March 8, 2024, can be attributed to a similar reason. Upon the news of the passing of Japanese cartoonist Akira Toriyama, the company's stock price rose on that day due to the fact that the protagonist of his masterpiece, *Dragon Ball*, is named Son O Kong. Son O Kong's stock price increased by 12.21% on the day and soared as high as 16% during trading hours.
Another instance of stock prices surging in the wake of a meme has been observed recently. A prime example is last June, when Doosan Group stocks surged across the board following news that Nvidia CEO Jensen Huang would throw the ceremonial first pitch at a Doosan Bears game in the Korean Professional Baseball (KBO).

Theme stock memes are not necessarily created only based on names or celebrities. In July of this year, as the market capitalization threshold for maintaining KOSPI listing was tightened from 20 billion won to 30 billion won, concerns arose regarding the delisting of seafood processing company Hansung Corporation.
Then, in online communitiesHansung CorporationHeartwarming stories spread about the company's steadfast support of peace concerts for Korean War veterans for 25 years. Subsequently, public opinion shifted to the sentiment that "we must support the good company that helped those who dedicated themselves to the nation." This escalated into a "Money-ssul" campaign, in which people simultaneously authenticated photos of their product purchases and stock trading accounts.MonamiIt followed a similar trajectory of rapid surge. Monami had already established itself as a "patriotic theme stock" after emerging as an alternative brand to domestic writing instruments during the "No Japan" movement in 2019. During the "No Japan" campaign, the stock price surged by over 250% in a single month, and it also rose during the release of contaminated water from Fukushima in 2023. Even this time, following the revelation of the company's impending delisting, the stock price rose amidst a buying spree by retail investors who believed "Monami must be saved."


The investment community dismisses such cases as "director class," butAn unhealthy structural phenomenon in the domestic stock market where irrational buying based on similar names or touching stories repeatedly occurs.There are also voices of concern saying that...
Financial authorities have also been consistently warning about this.
An official press release issued by the Financial Supervisory Service last March stated, "Investors who invest based on unfounded information and rumors without verifying the company's value through disclosures, etc., may suffer losses due to a sharp drop in stock prices."
The Market Surveillance Committee of the Korea Exchange also stated, "We are preventing herd trading by general investors by publicly declaring stocks with a high probability of speculative or unfair trading as 'investment caution stocks'."
Herd trading refers to trading by jumping on the bandwagon of others' movements. The Ministry of Economy and Finance’s Dictionary of Current Economic Terms also defines it as "trading that follows others." Hyein was actually designated as an investment warning stock during its previous surge.

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