Sangji Construction, a Kosdaq-listed builder in South Korea, hit the upper daily price limit for eight consecutive trading days from Apr. 2 to Apr. 15—excluding Apr. 10 and Apr. 15, when trading was suspended after the stock was flagged as an “investment warning” and “investment risk” issue. During the period, shares surged 712 percent, soaring from 3,165 won to 25,700 won. The spike, however, came without any clear positive developments. In fact, according to its business report filed on Mar. 21, the company reversed from a net profit of 37.2 billion won in 2022 to a net loss of 26.7 billion won in 2023. When the Korea Exchange requested an inquiry disclosure on Apr. 7, Sangji Construction responded that there was “no material information to disclose.” A financial investment industry source attributed the explosive rally to a single factor: the stock had been classified as a so-called “Lee Jae-myung-themed” stock. The company’s former outside director had reportedly joined the presidential campaign of Lee Jae-myung, former leader of the Democratic Party of Korea—prompting investors to associate the stock with politically themed shares.

Graphics by Baek Hyeong-seon

With South Korea’s presidential election set for Jun. 3, politically linked stocks are once again seeing frenzied trading. But in many cases, the connection between these companies and the politicians they are tied to is tenuous at best.

A 2022 study by the Korea Capital Market Institute (KCMI) analyzed 83 political stocks that circulated during that year’s presidential election. It found that 44 percent had been categorized as political-themed stocks simply because company executives and candidates had a mutual acquaintance. “In most cases, these were vague associations with no direct relevance to the companies’ business activities,” the institute noted.

Orient Precision, an auto parts supplier, was also labeled a Lee Jae-myung-themed stock. Its share price surged more than tenfold after Dec. 3, 2024, following martial law rumors. The only reported connection was that Lee had once worked at Orient Watch, an affiliate of the company.

Even companies with similar-sounding names were caught in the speculation. Oriental Precision & Engineering, a manufacturer of marine cranes, was grouped with Orient Precision simply due to the similarity in their names.

Firms linked—however loosely—to ruling party candidates have experienced similar speculative surges. Daeyoung Packaging was dubbed a “Kim Moon-soo-themed” stock because the former labor minister had, during his tenure as Gyeonggi Province governor, pursued a Universal Studios resort development near the company’s business site. Sunny Electronics was considered an “Ahn Cheol-soo-themed” stock because its former CEO had once worked at AhnLab, the cybersecurity firm in which Ahn is the largest shareholder.

Graphics by Baek Hyeong-seon

Speculation also mounted around Acting President and Prime Minister Han Duck-soo amid rumors of a presidential run. Sigong Tech, a company specializing in exhibition and cultural facilities, saw its shares climb sharply to 8,060 won on Apr. 14 from the 3,000–4,000 won range the previous month. The rally was driven by reports that the company’s largest shareholder had once worked with Han in 2008 on the Presidential Council on National Competitiveness during Han’s tenure as prime minister. However, when People Power Party floor leader Kweon Seong-dong said on Apr. 15 that Han would not be entering the party’s primary race, the stock fell 12 percent in a single session.

In another case, Daesang Holdings was categorized as a “Han Dong-hoon-themed” stock in the lead-up to the Apr. 10 general election. The reasoning: actor Lee Jung-jae, who is dating Daesang Group Vice Chairwoman Lim Se-ryung, is a high school classmate of former People Power Party leader Han Dong-hoon.

Stocks that gain on flimsy political links often see sharp reversals after the election.

Daesang Holdings, which had surged amid speculation of ties to Han Dong-hoon, peaked at 12,110 won on Feb. 23, 2024. By Apr. 11—the day after the general election—it had dropped 30.5 percent to 8,420 won.

Even shares tied to winning candidates weren’t immune from the post-election downturn. Dongshin Construction, which had been labeled a Lee Jae-myung-themed stock because its headquarters is located in Lee’s hometown of Andong, North Gyeongsang Province, rose to 30,850 won on Mar. 25, 2023. On Apr. 11, it fell 35 percent to 20,000 won.

Hwacheon Machinery, tagged a “Cho Kuk-themed” stock because a former auditor had attended the same law school—University of California, Berkeley—as Cho, the former head of the Rebuilding Korea Party, also saw its shares plunge. The stock fell from 9,010 won on Mar. 25 to 4,235 won on Apr. 11, a 53 percent decline.