SEOUL, KOREA - The share prices of state-run corporations are showing wide fluctuations of late. State-owned enterprises are usually stable in their share price movements as their business structure is relatively simple and financial results are easy to predict. Since the inauguration of Choi Kyoung-hwan as the new finance minister, 

 

 

 however, their shares have been affected by a series of policy announcements such as tax hikes, public utility rate adjustments, and regulatory reforms.

 

For example, the shares of Korea Electric Power Corp. were closed at 43,500 won on September 12, up 2.11 percent from the previous day. For about little more than seven months until August 11 this year, the company's share price has increased 27.63 percent. But the price dipped in the mid-August to the level of the early 40,000-won level. After the Chuseok holidays, the company shares are rising again.

 

This is mainly because the government's policy measures are directly helping its bottom line. Followed by a rate hike of 5.4 percent in November last year, it will be able to raise the rate once more during the second half of this year, possibly more than the last time.

 

Not all state-run enterprises have benefited from government policy measures. Unlike Korea Electric Power, KT&G and Korea Gas Corp. have seen their share prices plunge for the past several days. For KT&G, it was the announcement that the government would raise the cigarette price by 2,000 won, or 80 percent, that brought down the price by 8.27 percent for two trading days. Earlier analysts had expected the price hike would help the tobacco monopoly's financial results. But the price rise would accompany a cut in the demand as much as 34 percent, which was the main reason that plummeted the share price.

 

For Korea Gas Corp., a change in the rate scheme early this year has been a factor for a decline in the company's share price. In the second half of last year, the company saw its price rise until early this year thanks to a hike in retail gas rates for the first time in five years. But the momentum was dissipated after the rate scheme change, which analysts said would continue at least until the end of the third quarter.