"Blamed on Nuclear Phase-Out"... Korea Electric Power Corporation Plummets from 2nd to 22nd in Market Capitalization

[Asia Economy Reporter Koh Hyung-kwang] The stock price of Korea Electric Power Corporation (KEPCO) has been on a continuous decline due to the government's nuclear phase-out policy. Once ranked 2nd or 3rd in market capitalization, it has now slipped out of the top 20. With the spread of the novel coronavirus disease (COVID-19), raising electricity rates has become difficult, making a near-term stock price rebound unlikely.

According to the Korea Exchange on the 7th, KEPCO's stock price closed at 21,100 KRW, down 2.3% from the previous trading day. This represents a 24.1% drop compared to the year-end price of 27,800 KRW last year. Compared to the price of 36,000 KRW a year ago, it has plunged 41.3%.

Market capitalization has also significantly decreased. A year ago, KEPCO's market cap was approximately 22.98 trillion KRW, but based on the closing price yesterday, it stands at 13.5454 trillion KRW. This means it has shrunk by about 9.43 trillion KRW in one year. During this period, its market cap ranking fell 14 places from 8th to 22nd. KEPCO, which held the 2nd place in market capitalization until the first half of 2016, has fallen to the 20th rank within just four years.

Over the past year, while KEPCO's stock price dropped by 40%, foreign investors sold shares worth 945.6 billion KRW. Most of the foreign selling volume was absorbed by individual investors (820.3 billion KRW) and institutions (85.2 billion KRW).

KEPCO's stock price has been declining steadily since the current government took office. The Moon Jae-in administration's nuclear phase-out policy led to inspections and maintenance plans for nuclear power plants, resulting in a decrease in nuclear power plant operation rates, which negatively impacted KEPCO's performance.

KEPCO's operating loss last year was 1.35 trillion KRW, 6.5 times higher than the previous year's loss of 208 billion KRW. This is the largest loss since the global financial crisis when soaring international oil prices caused a record deficit in 2008 (-2.798 trillion KRW).

The anticipated electricity rate hike to boost stock prices has also become uncertain. The government had planned to obtain approval for an electricity rate reform plan in the first half of this year, including the introduction of a time-of-use rate system for residential customers and the abolition of essential usage guarantees. However, due to the spread of COVID-19 and its negative impact on already frozen consumer sentiment, the government considers such measures "inappropriate."

Ryu Je-hyun, a researcher at Mirae Asset Daewoo, analyzed, "Economic instability caused by COVID-19 brings cost reduction effects due to falling oil prices, but the unprecedented social anxiety is likely to affect KEPCO's electricity sales. Expectations for electricity rate increases are also declining further."

This content was produced with the assistance of AI translation services.