Korea Zinc Reaches All-Time High Since Listing
Individual Investors Buy Net 2.8 Billion KRW
Amid Expectations of On-Market Purchases Due to Management Dispute
Korea Zinc has reached its highest share price since its listing in 1990, becoming what is known as an ’emperor stock’ (when the price per share exceeds 1 million KRW). A flurry of individual investors is attributed to the anticipation that the shareholding competition between Chairman Choi Yoon-beom’s side and the Young Poong-MBK Partners alliance will intensify.
On the KOSPI market on the 24th, Korea Zinc finished trading at 1,138,000 KRW, a 29.91% (262,000 KRW) increase from the previous day, hitting the daily price limit. The share price began at 857,000 KRW and showed a downward trend initially, but surpassed the 1 million KRW mark just 20 minutes after opening.
With the closing price that day, Korea Zinc’s market capitalization swelled to 23.5603 trillion KRW, making it the 14th largest stock by market cap on the KOSPI market. It surpassed companies like Hyundai Mobis, LG Chem, and Samsung SDI.
According to investor trading data, institutions, other corporations, and foreigners were net sellers, while only individuals were net buyers, acquiring 2.76689 billion KRW worth of stocks. Many individuals seemed to anticipate the continuation of a management dispute.
On the 14th, Young Poong and MBK Partners completed a public purchase, securing a 38.47% stake in Korea Zinc. Chairman Choi’s side conducted a public purchase with Bain Capital. Although the results have not yet been released, if they achieved their maximum target of 2.5%, Chairman Choi’s share, including friendly shares, would be 36.49%, a mere 2 percentage points difference.
Korea Zinc also concluded its public purchase of treasury stocks the previous day, deciding to cancel all shares repurchased. Assuming Korea Zinc cancels 10% of its total issued shares through the buyback, Young Poong-MBK Partners’ stake would rise to 42.74%, and Chairman Choi’s stake would increase to 40.27%. Korea Zinc is expected to announce the results of the public purchase by the settlement date on the 28th.
The on-market purchase, securing of friendly shares, and legal disputes between Chairman Choi’s side and the Young Poong-MBK Partners alliance are expected to continue for a while. The futures market is also betting on a long-term battle. The November Korea Zinc futures, with expiration on November 14, rose to 1,089,000 KRW, soaring 29.95% (251,000 KRW) and hitting the price limit. The December futures, maturing on December 12, also jumped 29.91% (242,000 KRW) to 1,051,000 KRW.
However, investors should note that as the public purchase reduces the number of circulating shares, the stock price volatility could increase. Korea Zinc is considered a ‘heavy stock,’ with little difference between the high and low prices in a single trading day. The average difference between high and low prices during the one year before the management dispute (from September 13, 2023, to September 12, 2024) was only 2.45%. However, on this day, the gap between high and low prices reached 32.8%.