Once N'er-Do-Wells, Shares Of Lowest Ratings Are Hot

Share prices of firms with the lowest investment grade of BBB are increasingly buoyant, outperforming the benchmark stock index.

Shares of Daelim Industrial Co., rated BBB-plus, had jumped more than 74 percent to 8,800 won ($6.80) as of Friday from 5,050 won on April 17. The Korea Composite Stock Price Index gained 27 percent to 624.11 from 491.21, during the same period.

As for two other issues rated BBB-plus, Hyundai Mobis rose 73 percent, and Hyundai Development Co. was up 60 percent, during that time.

Among firms with a BBB-minus rating, Hyundai Securities Co. gained 83 percent, and Hanwha Chemical Corp. jumped 54 percent from April 17 to Friday.

"As a rotational buying pattern has prevailed recently, stock prices of leading corporations are losing upward momentum," said Cho Deok-hyun, a market analyst at Hanwha Securities Co. "BBB-rated companies' shares are becoming bullish."

Also, in the bond market, debt issued by BBB-minus companies are gaining. These debt instruments were rejected by investors as junk bonds earlier this year, but now investors snap them up on expectations about an economic recovery and improved corporate earnings, analysts said.

by Chung Jeh-won