SEOUL, November 19 (AJP) - Lotte Group's major listed subsidiaries saw their stock prices stabilize one day after a sharp decline, triggered by rumors of a liquidity crisis.
On Nov. 16, two YouTube channels posted videos about Lotte Group's supposed crisis, with rumors claiming the company would declare a moratorium and lay off 50 percent or more of employees in its retail subsidiaries next month.
These rumors led to a sell-off of Lotte Group's stocks, with Lotte Group, Lotte Chemical, and Lotte Shopping falling by 6.59%, 10.22%, and 6.6%, respectively.
As of 10:25 a.m. on Tuesday, the Korean conglomerate's key listed subsidiaries on the KOSPI (Korea Composite Stock Price Index) market had recovered from the previous day's losses. Lotte Group rose by 0.73 percent to 20,700 won (US$14.9), while Lotte Chemical gained 1.52 percent. Lotte Shopping's stock price also showed signs of stabilization, with slight gains observed in trading.
Lotte Group dismissed the rumors, clarifying that they were unfounded. According to the company, the reports of a liquidity crisis were baseless and emphasized that market confidence in their stocks was returning.
Several securities firms supported this view, assuring that concerns over Lotte’s financial situation were unwarranted.
Hanwha Securities expressed confidence in Lotte's strategy for long-term growth, focusing on international expansion, retail media networks (RMN), and artificial intelligence (AI) initiatives.
KB Securities also alleviated concerns by noting that the peak of investment occurred last year and this year. It highlighted that Lotte Chemical's cash flow remains stronger than initially feared. The firm estimated Lotte Chemical’s debt ratio at 78.6 percent for this year, which they deemed manageable, and added that liquidity concerns were premature.
Meritz Securities acknowledged risks from the petrochemical downturn and Lotte Chemical’s finances but called the previous day’s stock movements an overreaction, emphasizing the need for better risk management.
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