Hanjin KAL Preferred Shares Surge 417%, Then Turn Volatile Amid Stake Battle
As a stake battle for control of Hanjin KAL intensifies, the company's preferred shares, which generally carry no voting rights, have dramatically outperformed its common stock. On the morning of Nov. 11, Hanjin KAL preferred shares hit the daily upper price limit shortly after the market opened, bu
The preferred shares of Hanjin KAL have experienced a remarkable surge of 417% in recent trading sessions, only to become volatile shortly after. On November 11, the preferred shares reached the daily upper price limit shortly after the market opened but later fell to the low 110,000-won range. In contrast, the common shares dropped more than 11%, plummeting to around 210,000 won.
This volatility was triggered by a disclosure that Hoban Construction had become Hanjin KAL's largest shareholder, holding a 20.69% stake, surpassing Cho Won-tae and his affiliates' 20.58% stake. Cho's side subsequently announced plans to buy more shares early next month, setting the stage for renewed contest for control of the company.
Market observers have also speculated that Hoban Group may seek board representation at Hanjin KAL's annual shareholders meeting in March. The preferred shares' surge is notable, with the stock closing at 26,300 won on October 30 and then soaring 417.5% to 136,100 won, outperforming the common shares' 92.9% gain over the same period.
The Korea Exchange classified the preferred shares as an investment warning issue on November 6 and suspended trading for a day on November 10 due to concerns over excessive volatility. The limited supply of preferred shares, totaling approximately 530,000, which represent only 0.8% of the company's total issued shares, has made the stock particularly susceptible to sharp price swings even with limited buying interest.
The concentration of short-term trading activity in the preferred shares is evident, with trading value reaching 14.8 billion won, or 27% of their total market capitalization, on November 9. Analysts have cautioned that the current rally in preferred shares may be difficult to sustain, similar to a similar pattern observed during Hanjin KAL's 2020 control dispute, where investors shifted funds rapidly into common shares, carrying voting rights, as the shareholder vote approached, causing preferred share prices to decline.
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