Oct 12 KOSDAQ Gainers: Kumho Electric, Seosan, Kumho E&C Up 20-30% as Index Falls

Seoul — Three stocks rose 20% or more on Oct 12, the selection criterion for this roundup. KOSPI fell 3.65% to 6,384.24 and KOSDAQ (the tech- and small-cap-heavy market) fell 4.83% to 849.19, yet Seosan (079650) and Kumho Electric (001210) hit the 30% daily limit and Kumho E&C (002990) gained 20.56%. News reports tied all three to SK Group chairman Chey Tae-won's visit to the planned Honam semiconductor cluster site and his pledge to move fast. None has a filing on DART (Korea's official disclosure system) that explains the rise.

At a glance

Kumho Electric (001210) hits limit up on Chey's remarks, with no company filing

Kumho Electric rose 29.93% to 11,070 won as it was grouped with Honam semiconductor cluster plays. Korea Economic TV, Gangwon Domin Ilbo and Ajunews attributed the limit-up to Chey saying he wants the project built "as fast as possible" after visiting the planned site. Asia Economy reported the visit dispelled recent talk of an investment withdrawal, and Gangwon Domin Ilbo wrote that related stocks, which had been falling since last month over doubts about the project's feasibility, jumped again. The stock was already up 29.93% at 1:30 p.m. and closed at the same level.

The company itself filed nothing. The only filing in the past seven days is a brief large-holding report submitted on Oct 8 by Baro Savings Bank, a day before the rise; the title alone does not reveal its content, so there is no basis to link it to today's jump. The headlines also report only the chairman's words and do not say what Kumho Electric would do in the cluster. The stock traded 132.5 billion won worth in a day against a market value of 139.8 billion won. Its close is still 16.8% below the Sept 2 close of 13,300 won.

Two things show whether the gain holds: whether Kumho Electric itself discloses a contract or business tied to the cluster, and whether turnover of this size repeats the next session. Theme stocks that rise on a remark alone tend to give the move back once trading thins.

Seosan (079650) also hits limit up, but what it does for the cluster is unknown

Seosan rose 30.0% to 6,760 won during the Honam semiconductor theme rally. Vegan News ("Kumho Electric, Seosan limit up on Honam chip theme strength") and ppss.kr ("Chey-led Honam chip cluster hopes… Seosan limit up, Kumho Electric up 29%") paired the two for the same reason. The headlines put the names side by side but do not explain how the company connects to the project. Other articles under the name are mostly about festivals in Seosan city, so the stock is easy to confuse with the municipality. The company filed nothing.

The price move looks more like a rebound from September's decline: the close of 6,760 won is nearly equal to the Sept 2 close of 6,790 won (-0.4%), and the stock swung 10% or more in a day several times in September. It is up 19.0% over five sessions. Foreign investors were net buyers for three straight sessions from Oct 6 to 8 (about 26,000, 37,000 and 118,000 shares), but today's flow figures are not yet tallied. Turnover was 20.0 billion won against a market value of 135.2 billion won.

What to watch is whether the company states its link to the cluster or files on it, and whether turnover holds once the name drops out of the headlines. Until the link is disclosed, the rise is explained only by being placed in the same basket.

Kumho E&C (002990) rebounds after four down days, then gives back part of the gain

Kumho E&C rose 20.56% to 13,430 won after four straight down sessions. Korea Economic TV listed it with Kumho Electric as a Honam chip cluster play. At 1:30 p.m. it was up 23.43% (13,750 won) but the gain narrowed by the close. The same report said the preferred shares gained about 12%.

Other news under the name that day covered a November sale of an apartment complex in Gumi and a patent registration in progress for a construction-site monitoring technology. Both are ordinary business items, so they are unlikely to explain today's jump. The company filed nothing in the past seven days. The close remains 21.5% below Sept 2, and turnover was 190.4 billion won, the largest of the three. Foreign investors were net buyers for three straight sessions from Oct 6 to 8 (about 105,000, 207,000 and 235,000 shares).

For a builder to benefit from a chip cluster, an order filing eventually has to appear. Whether one does, and whether the pullback from the intraday high carries into the next session, shows how solid this rise is.

How the stocks we covered earlier have done since

Of eight stocks we previously classified as "press reports only," seven are now below their closing price at the time; only RaonSecure is higher. That window includes today's 4.83% KOSDAQ drop.

In this record, jumps that rest on press reports alone were mostly reversed. Today's three stocks fall in the same category.