Sangji Construction, a small- to mid-sized builder ranked 570th in South Korea’s construction capacity evaluations, had been largely forgotten in the market until recently. Until last month, its daily trading volume rarely surpassed 10,000 shares. As of Apr. 1, its stock price stood at 3,165 won, and its market capitalization remained in the 10 billion won range.
But things changed rapidly starting Apr. 2. Rumors that the company was linked to former Democratic Party leader Lee Jae-myung began circulating on social media and YouTube stock channels. As a result, the stock surged fourteenfold by Apr. 17, hitting the daily upper limit for 10 consecutive trading days—excluding the two days when trading was halted by the Korea Exchange. By Apr. 17, the share price had jumped to 43,400 won, with its market cap swelling to 172.8 billion won ($121 million).
The reason Sangji Construction has been swept into the so-called “theme stock” category is tenuous at best. The company’s former outside director, Lim Moo-young, was involved in Lee Jae-myung’s presidential campaign during the 2022 election. However, his term ended in March 2024, and he is no longer affiliated with the company. It is also unclear what, if any, role he is playing in the upcoming presidential election.
As the nation gears up for an early presidential election, politically themed stocks are running rampant. Even amid weakened investor sentiment due to fallout from the U.S.-led tariff war, domestic political theme stocks are experiencing sharp rises and falls. As of Apr. 18, nine of the ten top-performing stocks for the month were linked to either Lee Jae-myung (seven) or Prime Minister Han Duck-soo (two).
“Good news? If we had any, we’d love to share it. But this is just what people are saying in the market, so it’s a bit awkward for us to comment. Other than the fact that our chairman shares the same family name, Gyeongju Lee clan as candidate Lee Jae-myung…” said an official from Taekwang Group.
Since the beginning of April, preferred shares of Heungkuk Fire & Marine Insurance, a subsidiary of Taekwang Group, have surged nearly 120 percent. Ahead of the June. 3 presidential election, most of the politically themed stocks gaining traction—such as Heungkuk—have little to no direct connection to the candidates they are associated with.
Many of the recently surging stocks are tied to companies associated with FuriosaAI, a firm Lee Jae-myung visited after pledging to invest 100 trillion won in artificial intelligence. While the companies could theoretically benefit from Lee’s election, investors are piling in based purely on speculative associations, often ignoring key financial indicators such as earnings and growth potential.
Stocks linked to Prime Minister Han Duck-soo are showing similar patterns. Construction technology firm Sigong Tech, which ranked fourth in share price increases this month, soared after media reports noted that its largest shareholder had previously served on the National Economic Advisory Council alongside Han.
In a particularly far-fetched case, Oriental Precision & Engineering saw its stock surge simply because its name resembles that of Orient Precision a company where Lee Jae-myung worked as a young man.
In the case of Sangji Construction, the stock rally appears to be partly driven by an influential economic YouTuber with ties to the Democratic Party. Seon Dae-in, a researcher from the KS Economic Research Institute and a former Democratic Party primary candidate for Yongin mayor in the 2018 local elections, was revealed to have been accumulating shares of Jungang Advanced Materials, Sangji Construction’s largest shareholder. This revelation triggered a wave of blind buying. On Apr. 14, Jungang Advanced Materials announced that it would issue third-party allotment shares worth 10 billion won, including 3 billion won to Seon and his wife. “For a company like Sangji Construction, which posted a net loss last year and lacks cash assets to cover its short-term debt, the only people investing are seasoned market players—or moths drawn to the flame,” a securities analyst said.
