Shares in Codes Combine, a loss-making clothing company, closed 6.68 percent lower Wednesday, ending a nine-day rally that prompted the bourse operator to launch a probe for a suspected price rigging scheme.

The shares ended at 141,000 won ($118) on the secondary KOSDAQ exchange, after choppy trading that sent the stock price 17.27 percent down at one point and 21.84 percent up at another point.

Between March 3 and Tuesday, Codes Combine stock gained a whopping 559 percent in value, rising by the daily limit of 30 percent for the past four days. 


Accordingly, the company’s market cap swelled to 5.7 trillion won from 860 billion won. Only two companies are larger on KOSDAQ now -- Celltrion and Kakao. At its high point during Wednesday’s trading, Codes Combine briefly surpassed Kakao to become the second largest by market cap.

The bourse operator Korea Exchange suspects manipulative forces may be behind the stock’s seemingly unexplainable rally. It found that buy orders were concentrated on seven accounts at foreign brokerage firms and requested the brokerages to submit transaction details.

In its filing on March 10, Codes Combine said it has nothing to disclose that may be causing the spikes in stock price.

Codes Combine, having logged operating losses for four consecutive years, is on the bourse’s watch list for a potential delisting.

Only 0.6 percent of its total outstanding shares, or 250,000 shares, are publicly trading, as the rest is locked up in the hands of the firm’s largest shareholder Cotton Club and creditors. 

By Lee Sun-young
(milaya@heraldcorp.com)