Gangnam Style Stock Markets

October 15, 2012 in Daily Bulletin

Gangnam Style is a music video that has gone viral, and there is a lot that it tells us about Korean stock markets:

  • Despite losing money over the past year a Korean firm called DI has seen its share price jump almost 500%. The reason? The chairman’s son is the creator of Gangnam Style.
  • This development should make no difference to how the company performs. Yet Korea has a history of unimportant things causing wide swings in the stock market.
  • If the child of a company’s CEO marries into the right family, then the company can expect to see gains in the market.
  • Or, if a person is seen in a photograph with an important politician, they too can expect to see a rise in their company’s performance.
  • These gains are generally temporary, and the stock soon comes back down to earth.
  • Some investors have taken to exploit this quirk of the Korean stock exchange to spread small pieces of seemingly innocuous and false information to make quick gains.

Read more about the ants behind the phenomenon, and examples of the wild swings in Korea’s market over here.

Source: The Economist

Via: Marginal Revolution