Stock bubbles, Gangnam style?

by on October 13, 2012 at 4:38 pm in Current Affairs, Economics, Music | Permalink

Matt Yglesias reports:

Why is South Korean semiconductor manufacturer DI seeing its share prices surge? Is it a key supplier for the forthcoming iPad Mini? An integral element of Samsung’s next great smartphone? Nope. It’s surging because its chairman and main shareholder is Park Won-ho, father of Park Jae-sang, a.k.a. PSY, a.k.a. the “Gangnam Style” guy.

Why a family link to a viral video sensation should help this company is difficult to say, but apparently this kind of theme stock surge is a not-uncommon phenomenon in the Korean equity markets. South Korea, I would note, is one of the most recently affluent countries around so it’s simply possible that the Koreans markets haven’t had enough “learning” to avoid fast-rising momentum bubbles.

1 Kyle B October 13, 2012 at 5:32 pm

“South Korea, I would note, is one of the most recently affluent countries around so it’s simply possible that the Koreans markets haven’t had enough “learning” to avoid fast-rising momentum bubbles.”

South Korea, I would note, is one of the most recently affluent countries around so it’s simply possible that EQUITY markets haven’t had enough “learning” to avoid fast-rising momentum bubbles.

Fixed.

Nice little subtle racism there, as if older markets have been any less prone to bubbles. It’s only been a little over a decade since the dot com crash and the housing bubble is still fresh. Saying that Koreans simply don’t know better reeks of Western elitism. Those damn Koreans just haven’t had markets long enough. They must not be smart like us.

2 Zachary October 13, 2012 at 8:44 pm

I believe that Matt did not mean to say that we don’t have bubbles in the West. I think he means to say that when we have bubbles, it is not because the company concerned is merely loosely related to a frivolous social variable. Unless the Korean equity markets ‘know’ something that is very non-obvious about the relation, such as how is could affect revenues and profits, then Matt is quite right in criticizing them. I’m not sure that he’s criticizing them accurately for the ‘right reason’ – whatever the cause of the price jump – but the whole thing does seem silly [if it is indeed the reason for the price increase].

3 TR W October 13, 2012 at 9:46 pm

Typical East Asian who thinks his shit doesn’t stink and trying to stop the conversation by throwing around the “racism” label. If you disagree with him then state why, don’t cowardly throw the “racism” label around like somehow that disproves his point.

I don’t think this stock market rise has anything to do with being a newly affluent economy. It has to do with East Asian’s nature of being very status conscious. Psy has status now and the stock market investors want to bandwagon on that status.

4 Mac October 13, 2012 at 11:07 pm

Yes, and Yglesias is a typical Jew. And the nature of Jews is to be very anti-gentile.

5 Adrian October 14, 2012 at 8:18 am

I think you win the award for dumbest post on MR, and congrats

6 Brian Donohue October 14, 2012 at 11:02 am

I dunno. that first sentence, stand-alone, may be sublime comedy.

7 TMC October 14, 2012 at 1:20 pm

I’d say it’s a tie with Kyle.

8 Gahooo! October 15, 2012 at 1:29 am

Judging by the comments on these South Korea articles, there seems to be a correlation between the appearance of the “Asians are status conscious” argument, and the overall hilariousness of the comment.

9 david October 13, 2012 at 5:45 pm

So I was arguing with some acquaintances about what might rationally justify this.

One hypothesis: Korean tax law might permit a majority shareholder tax advantages in using their own corporation as a savings vehicle. Of course, if the majority shareholder stuffs the corporation with assets, minority shareholders would benefit too.

10 Jacob October 13, 2012 at 6:44 pm

Thanks for this – looking for pre-borrow as we speak…

11 Dismalist October 13, 2012 at 6:46 pm

Is the Korean stock market thin, perhaps?

For billions of reasons, not every country is as stock crazy as the US of A, for better and for worse.

12 gwern October 13, 2012 at 7:25 pm

Who could’ve predicted such a stupid bubble? No one.

The Efficient Market Hypothesis strikes again!

13 Sean Brown October 16, 2012 at 9:02 am

Big reason for this is that the stock lending market in Korea is not very liquid, and zero for this type of stock. Part of the reason EMH is wrong in the stockmarket is because some stocks are very hard or impossible to legally short (e.g. Spanish banks).

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