Korean Exchange Sounds Alarm Over Superconductor Stock Mania

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by Tyler Durden
Friday, Aug 04, 2023 - 12:20 AM

Late Wednesday, the Korean Exchange warned investors about speculative trading in superconductor-related stocks following claims of a technological breakthrough that could revolutionize the energy industry.

On Thursday, small-cap stocks such as Duksung Co. and Sunam Co. surged as much as their 30% daily limits for their third consecutive session. Sunam has jumped 220% in the last eight sessions, while Duksung has increased 165%. Mobiis Co. and Shinsung Delta Tech Co. have risen by 125% and 107%, respectively. 

Because of the volatility, the exchange told investors to be careful before investing in Duksung, Sunam, Mobiis, and Shinsung Delta Tech. It issued the lowest of a three-level warning system on the companies, stopping short of trading halts. 

"The bourse hands down such designations when there's a probability of speculative bets and unfair trades so that investors may exercise caution before investment," Bloomberg noted, adding, "The exchange operator can escalate warning levels before mandating a one-day trading suspension."

On July 22, South Korean researchers published a paper on a new superconductor technology that utilizes a lead-based material called "LK-99" -- the world's first superconductor able to conduct electricity at room temperature and ambient pressure. Typically, superconductivity has only been achieved at sub-zero temperatures, limiting its use in the real economy to only a few commercial applications, such as hospital MRI scanners. The claim of the breakthrough might suggest superconductivity could revolutionize the energy industry.

"Investors should be cautious on increased volatility in these superconductor theme stocks as their substance is not clear," said Han Ji-young, an analyst at Kiwoom Securities Co.