Imbalance Between Shares Raises Questions on Pricing

A considerable portion of preferred stocks listed on the nation's main stock exchange was abnormally higher in price than their common stock, according to the Korea Stock Exchange on Sunday.

Currently, there are a total of 202 preferred shares listed on the market and their prices were found to be higher by 3.2 times on average than their common shares as of February 27. Among them, the prices of 32 preferred stocks were at least 1.5 times higher than their common stocks.

Choong Nam Spinning topped the list with its preferred stock price being 109 times higher than its common stock price, followed by Dae Chang Ind., whose preferred share price was 66 times higher than the common shares. Dong Bang Agro Corp.'s preferred share price was 47 times higher than the common shares. Samsung Heavy Ind., Hyundai MOBIS, Ssangyong Cement Industrial Co., and Shinwon also posted preferred share prices 50 percent higher than common share prices.

"Even if the preferred stocks offer fixed return just like bonds, they should be regarded abnormal if they are traded at prices 1.5 times higher than their common shares," said an official at the main stock exchange.

by Rah Hyun-cheol