'Samsung Heavy Industries Preferred Stock Hits Upper Limit for 7 Consecutive Days, What's Happening?'

[Asia Economy Reporter Koh Hyung-kwang] Samsung Heavy Industries preferred shares have recorded the upper price limit for seven consecutive trading days, showing signs of overheating. Although the impact of the 23 trillion won 'Qatar Jackpot' is significant, there are concerns that the rate of increase compared to common shares is excessive. The Korea Exchange has designated Samsung Heavy Industries preferred shares as an investment risk item.

According to the Korea Exchange on the 12th, Samsung Heavy Industries preferred shares closed at 339,500 won on the previous day in the KOSPI market, rising to the maximum price limit (29.8%) compared to the previous trading day. This marks seven consecutive trading days of hitting the upper price limit since the 2nd. Samsung Heavy Industries preferred shares, which were 54,500 won on the 1st, surged by a staggering 523% to close at 339,500 won on this day. The stock price has increased more than sixfold in the past two weeks.

The surge is due to large-scale orders received by domestic shipbuilders. The news that three domestic shipbuilders, including Samsung Heavy Industries, secured orders for 100 liquefied natural gas (LNG) carriers worth 23 trillion won from Qatar led to an overall rise in shipbuilding stocks. However, the rate of increase in Samsung Heavy Industries preferred shares is considered excessively overheated. The common shares of Samsung Heavy Industries closed at 6,930 won, up 0.8% on the previous day. This represents a 39.1% increase compared to the closing price of 4,980 won on the 1st.

While Samsung Heavy Industries common shares rose by about 40%, preferred shares surged over 500%. Other domestic shipbuilders that also led the large orders from Qatar, Daewoo Shipbuilding & Marine Engineering and Korea Shipbuilding & Offshore Engineering, rose only 12.7% and 7.3%, respectively, during the same period. This is why there are concerns that the rise in Samsung Heavy Industries preferred shares is excessive.

It is analyzed that this phenomenon occurred because the number of circulating shares of Samsung Heavy Industries preferred shares is too small. The number of circulating shares of Samsung Heavy Industries preferred shares is 114,845, which is only about 0.2% of the common shares (630 million shares). This is also a relatively small volume compared to other preferred shares. A financial investment industry official explained, "There are about 110 KOSPI preferred shares and less than 10 KOSDAQ preferred shares, and among them, Samsung Heavy Industries has one of the lowest preferred share ratios compared to common shares, resulting in a large divergence rate," adding, "In this situation, it is easy to drive up the price of Samsung Heavy Industries preferred shares."

The problem is that when preferred shares start to fall, the small volume may make them relatively harder to dispose of than common shares, potentially causing greater damage to investors. The Korea Exchange designated Samsung Heavy Industries preferred shares as a short-term price surge investment warning item on the 9th and suspended trading for one day, but the overheating trend continued even after trading resumed. On this day, the Korea Exchange designated Samsung Heavy Industries preferred shares as an investment risk item and suspended trading again.

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