Top 10 Groups' Market Cap Evaporates by 86 Trillion Won This Year

From 864 trillion won at the beginning of the year to 776 trillion won as of the 11th, a decrease of about 10%
All top 10 groups declined... Hyundai Heavy with the largest drop of 25.36%
Samsung -5.61%, LG -3.38%... Only these two recorded single-digit decreases

[Asia Economy Reporter Song Hwajeong] As the stock market has continued to weaken due to the novel coronavirus infection (COVID-19), the market capitalization of the top 10 conglomerates has evaporated by 86 trillion won this year.

According to financial information company FnGuide on the 12th, the market capitalization of the top 10 conglomerates stood at 776.2369 trillion won as of the previous day, down 10% from 863.0872 trillion won at the beginning of the year.

All top 10 conglomerates saw a decrease in market capitalization. The largest decline was Hyundai Heavy Industries, whose market capitalization fell by 25.36% this year. Hanwha (-24.11%), Lotte (-22.73%), Hyundai Motor (-21.55%), and POSCO (-20.22%) also saw decreases of over 20%, following closely behind.

Only LG and Samsung recorded single-digit decreases, with market capitalizations down 3.38% and 5.61%, respectively.

The spread of COVID-19 and the drop in oil prices appear to have directly impacted the decline in market capitalization of the top 10 conglomerates. The construction and shipbuilding sectors, expected to be affected by the oil price drop, experienced significant declines. Samsung Group, which managed to limit the decrease to single digits, still saw Samsung Engineering (-34.97%) and Samsung Heavy Industries (-24.93%) suffer substantial drops. Among the top 10 conglomerates, Hyundai Heavy Industries showed the steepest decline, with Hyundai Mipo Dockyard and Korea Shipbuilding & Offshore Engineering down 26.73% and 23.90%, respectively, and Hyundai Construction Equipment, affected by the construction sector, plummeting by 40%.

Song Yurim, a researcher at Hanwha Investment & Securities, said, "The recent drop in oil prices is negative for construction stocks in two ways: first, the absolute level of oil prices is excessively low, and second, the only hope for growth in construction orders is overseas." She explained that if crude oil prices fall to $20-30, new project orders could be canceled or delayed due to the financial deterioration of oil-producing countries, worsening conditions of clients, and declining project profitability. This could also cause difficulties in project progress and payment collection. Additionally, with ongoing real estate regulations expected to reduce domestic orders, overseas orders were anticipated to compensate. Song said, "The sharp drop in oil prices has damaged these investment points, adding insult to injury for construction stocks that have already fallen significantly."

Lee Dongheon, a researcher at Daishin Securities, said, "A short-term adjustment in the shipbuilding sector due to the oil price drop is inevitable. However, the fundamental competitiveness of the companies remains intact, and there will be strong rebound momentum when oil prices recover following COVID-19 stabilization or production cut agreements."

Insurance stocks, which posted poor earnings in the fourth quarter of last year, also saw significant declines, eroding the market capitalization of group stocks. Hanwha Life Insurance recorded the largest drop among the top 10 conglomerates' listed companies, with market capitalization down 43.89% from the beginning of the year. Other companies such as Hanwha General Insurance (-35.96%), Samsung Life Insurance (-31.33%), and Samsung Fire & Marine Insurance (-24.95%) also saw large decreases in market capitalization.

Kim Jiyoung, a researcher at Kyobo Securities, said, "The four life insurance companies recorded a net loss of 37.4 billion won in the fourth quarter of last year, continuing deficits compared to the same period last year, while the five non-life insurance companies' net income in the fourth quarter decreased by 73.5% year-on-year. With the recent COVID-19 situation increasing the likelihood of global interest rate cuts this year, it will be difficult for investment sentiment toward insurance stocks to recover significantly in the near term," she analyzed.

Among the top 10 conglomerates' listed companies, only six saw an increase in market capitalization this year. SK Rent-a-Car showed the largest increase, rising 28.37%, followed by Samsung SDI, which increased by 24.57%. Others with increased market capitalization included LG Chem (16.24%), Samsung Biologics (12.95%), POSCO Chemical (9.63%), and SK Bioland (6.44%).

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