Editor's PiCK
'Korean Won Coin Stocks' Plunge in Droves...US Circle's Volatility Triggers Panic Sell-off
Summary
- Over the past two days, major Korean won stablecoin-themed stocks such as Me2on (-23%%) and KakaoBank (-14%%) have plunged.
- This is attributed to a rapid cooling of investor sentiment following short-term overheating warnings for stocks that had previously surged on government policy expectations.
- A 26%% plunge in the share price of Circle, the world's second-largest dollar stablecoin issuer, is said to have also negatively impacted investor sentiment for related domestic stocks.
Me2on down 23%, KakaoBank down 14%
Short-term overheating warnings cool investor sentiment
US Circle drops 26% over two days
Since the inauguration of the Lee Jae-myung administration, Korean won stablecoin-themed stocks had been soaring, but over the past two days, they have plummeted en masse. This is analyzed as an 'aftershock' following concerns that stock prices had risen excessively on vague expectations. The sharp decline of Circle Internet Financial Ltd., the world's second-largest issuer of dollar stablecoins, also affected investor sentiment.
On the 26th, gaming company Me2on Co., Ltd. plunged 23.21% to close at ₩5,590 on the KOSDAQ market compared to the previous day. After a rapid rise, Me2on's trading was suspended the previous day, and when trading reopened, a flood of sell orders caused the share price to nosedive. Until the previous day, the company had seen repeated surges due to such reasons as launching a casino game platform linked to stablecoins. From immediately after the presidential election (the 3rd) to the 25th, the share price had surged by 289.3%.
KakaoBank Corp., which filed a trademark for stablecoins the previous day, also tumbled 14.34% on the KOSPI market. Its affiliate, Kakao Pay Corp., had its shares suspended on the 24th and then again after only two days of resumed trading. Among other stocks classified as Korean won stablecoin-themed, Hecto Financial Co., Ltd. (-15.87%), ITCEN Global Co., Ltd. (-15.13%), and Danal Co., Ltd. (-14.61%) all dropped by over 10%. LG CNS (-8.19%) and Shinsegae I&C Inc. (-6.31%) also could not avoid sharp declines.
Analysts say that as warnings about short-term overheating emerged, the market quickly turned into a plunge. These stocks had been criticized for rising excessively on expectations of government-introduced Korean won stablecoins without clear technological capabilities or business plans. Additionally, a two-day, 26.28% drop in the share price of Circle, the world's only publicly listed stablecoin issuer, is cited as a factor that further chilled investor sentiment.
By Jin-sung Kim, jskim1028@hankyung.com
Korea Economic Daily
hankyung@bloomingbit.ioThe Korea Economic Daily Global is a digital media where latest news on Korean companies, industries, and financial markets.
