Political edge helps some shares

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Political edge helps some shares

Sunny Electronics shares jumped 1,000 percent this year, leading a surge in trading of Korean small-cap stocks amid speculation the country’s next president will help smaller enterprises.

Trading volume for companies outside the top 300 is the heaviest in at least 12 years as candidates pledge stricter regulation of big businesses like the Samsung and Hyundai groups and greater support for small and medium-sized firms.

The only explanation for the out-sized gains by Sunny, which has posted losses since 2010, are bets it may somehow benefit from possible ties to one of the front runners, said Choi Sang-hoon, an investor relations official at the company.

“Some companies are just soaring based on groundless reasons that somehow connect them to the candidates,” said Heo Pil-seok, chief executive officer at Midas International Asset Management, which oversees $5 billion. “There’s no way that a specific company will get special perks if a politician close to it becomes president.” Choi said Sunny’s vice president, Song Tae-jong, previously worked for AhnLab, the antivirus software maker founded by candidate Ahn Cheol-soo. He declined to comment on whether there were any continuing ties between Song and Ahn. Yu Min-yeong, a spokesman for Ahn, who is running second in polls for the Dec. 19 election, said there are no longer any links between the two men.

Shares of Sunny, which is based in the southern city of Chungju, North Chungcheong, and makes components used in computers and mobile phones, soared to 4,400 won ($3.95) yesterday from 397 won at the end of last year. Bloomberg

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