Korean public stocks halved from peaks as political influence scares away investors

Stocks of listed Korean public enterprises have more than halved as they lost confidence from foreign investors for their political management that has worsened their income and financial balance.

As of Friday, the prices of eight public stocks were more than halved from their peak in historic chart.

Grand Korea Leisure (GKL), a foreigner-only casino operator in Korea, dipped 73 percent from its peak. Korea Plant Service & Engineering, an engineering firm under Korea Electric Power Corporation (KEPCO), and Korea District Heating Corp. shares plummeted 71 percent, respectively.

Shares of KEPCO were off 64 percent.

Korea Gas Corp., KEPCO Engineering & Construction, Kangwon Land, and Industrial Bank of Korea, were performing around 50 percent under their historic peaks.

Korea District Heating Corp. and GKL had lost 10 percent in 2020 when the Kospi rallied more than 30 percent.

Political influence in management was primary damper. Energy companies suffered big as the former Moon Jae-in government pushed with phase-out from lucrative nuclear reactors and forced speedy migration to renewable sourcing that seriously dented their balance sheets.

Public enterprises were hindered from raising utility rates despite the surge in fuel import cost due to the impact on the economy under pandemic woes and inflation.

Due to freeze in power rates over the last two years, KEPCO¡¯s deficit is projected to swell to 24 trillion won ($18.48 billion) this year.

Foreign investors who had invested in public stocks for government security abandoned them due to poor outlook.

Foreigners¡¯ stake in GKL at 30.35 percent in 2011 nosedived to 2.72 percent by the end of June.

Foreign ownership in Korea District Heating Corp. and KEPCO stopped at 0.84 percent and 14.72 percent.

Listed public enterprises must tend to their profitability and enterprise value just like private companies, but they had failed in the area, noted Heo Kyung-sun, a researcher at state think tank Korea Institute of Public Finance.

[¨Ï Maeil Business Newspaper & mk.co.kr, All rights reserved]