Blind investing makes market wild

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Blind investing makes market wild

With the Korean stock market’s recent strong performance, an increasing number of investors are blindly buying stocks, resulting in escalating prices with no reasonable explanations.
According to the securities industry yesterday, stock prices of Lotte Tours Co., Aiins Inc., Seoul Palace Hotel, Woori Technology Inc. and Cheil Grinding Wheel Co., are going up sharply, but these companies said through public disclosures at the Korea Exchange that they have no possible cause for the sudden jumps.
Lotte Tours’ stock has increased 88.1 percent since May 16 due to continued purchases by institutions. The company said other than the rumor that it joined a consortium to build a skyscraper in the Yongsan District in Seoul, there is no explanation for the sudden appreciation.
Aiins gradually increased after May 28 and then rose 54.9 percent over six trading days after June 5. Aiins announced earlier that there are no affirmable reasons for the surge.
Similarly, Seojoo Tourist’s shares have hit the upper limit of daily trading on three days since June 8. The company said it does not understand the reason behind the rise. The share price then dropped by the lower limit for two days, but jumped 9.4 percent yesterday. Mostly individual investors are trading the issue.
Meanwhile, Woori Technology has hit the ceiling on five trading days since June 5. The price fell 7.5 percent after an announcement that there is no specific cause for the rise, but the price rose again by 6.5 percent last Wednesday after the announcement.
The current trend has a downside.
“Blind investing without strategy always ends up losing money in the end,” said an analyst from Samsung Securities Co. who did not want to be identified. “In 2004, individual investors purchased a vast amount of biotech stock items expecting stem cell technology to succeed, but the result was absolutely terrible.”


By Jung Yong-joon Contributing Writer [ebusiness@joongang.co.kr]
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