Samsung Electronics' Lowest Profitability... Retail Investors Bowing Their Heads in the Rebound Market

While KOSPI rebounded 31.2%

Samsung Electronics rose only 14.8%

Despite being the top net purchase by individuals

Lowest increase rate among the top 10

[Asia Economy Reporter Ko Hyung-kwang] Although the domestic stock market is recovering rapidly, individual investors who invested in Samsung Electronics are not optimistic. While the KOSPI index, which plunged due to the COVID-19 pandemic, has recovered more than 30% from its low point, the increase in Samsung Electronics, the top net purchase stock by individuals, has not even reached half of the KOSPI’s rise, showing sluggish movement. Experts predict that a V-shaped rebound for Samsung Electronics is unlikely.

According to the Korea Exchange on the 11th, Samsung Electronics closed at 48,800 KRW on the 8th in the KOSPI market, the same as the previous trading day. This marks a 14.8% rebound from the year’s lowest price of 42,500 KRW recorded on March 23. Compared to the KOSPI index’s 31.2% rebound from 1,482.46 to 1,945.82 during the same period, Samsung Electronics’ rise is less than half, a disappointing increase rate. Although it briefly surpassed 50,000 KRW around last month’s earnings announcement, the current performance falls short of individual investors’ expectations.

From March 23 to May 8, the average return of the top 10 stocks by individual net purchases was 26.4%. Hyundai Motor (37.2%), Hyundai Mobis (31.8%), LG Chem (31.5%), Samsung SDI (30.7%), Samsung Life Insurance (30.6%), and POSCO (30.4%) recorded returns similar to or slightly higher than the KOSPI’s increase. SK Hynix (22.5%), KB Financial (18.6%), and Samsung Electronics Preferred Shares (15.7%) also achieved better returns than Samsung Electronics. Among the top 10 stocks by individual net purchases, Samsung Electronics (14.8%) had the lowest increase rate.

Although Samsung Electronics’ stock price remains sluggish, retail investors continue to show strong interest and are scooping up shares. Starting with net purchases of 1.2769 trillion KRW in January, individuals bought 1.6005 trillion KRW worth of Samsung Electronics shares in February and 4.9587 trillion KRW in March. Although the purchase amount slightly decreased to 436.7 billion KRW last month, it still ranked first in individual net purchases. This month alone, 652.8 billion KRW worth has already been acquired. In total, 8.9257 trillion KRW worth of Samsung Electronics shares have been purchased this year. This amount exceeds the combined net purchases of the 2nd to 10th ranked stocks by individuals, which totaled 7.5433 trillion KRW, demonstrating Samsung Electronics’ overwhelming support from retail investors.

Despite this buying momentum, Samsung Electronics’ stock price rebound remains sluggish, largely due to significant selling pressure from foreign investors. Since March 23, foreigners have sold 1.0794 trillion KRW worth of Samsung Electronics shares. The total net sales by foreigners this year amount to 7.1558 trillion KRW. The persistent selling by foreigners is attributed to the global economy’s slow recovery and the difficulty in short-term improvement of the semiconductor and smartphone sectors, which heavily impact Samsung Electronics’ earnings.

Experts forecast that Samsung Electronics’ rebound will begin after the third quarter, with an upside potential of around 20-30%. Ahn Kyu-jin, a researcher at DB Financial Investment, predicted, "Due to the full impact of COVID-19 since March, Samsung Electronics’ operating profit for the second quarter is expected to fall short of market expectations at 7.3 trillion KRW." Lee Soon-hak, a researcher at Hanwha Securities, said, "Second-quarter earnings may be weak due to COVID-19’s impact. Although gradual recovery is expected from the third quarter, a sharp V-shaped rebound is unlikely."

In the securities industry, recent public apology by Samsung Electronics Vice Chairman Lee Jae-yong is also expected to positively influence the stock prices of Samsung Electronics and its major affiliates. Jung Dae-ro, a researcher at Mirae Asset Daewoo, said, "With Vice Chairman Lee effectively giving up succession as the fourth generation, major affiliates such as Samsung Electronics, Samsung C&T, Samsung Life Insurance, and Samsung SDS will see a significant reduction in uncertainties related to corporate governance restructuring, allowing them to be evaluated based purely on their actual corporate value, which is positive."

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