[Initial Insight] The Emperor Stock, Opening the Way to Buy in Fractions

On the 24th, the KOSPI opened at 3119.70, up 29.49 points (0.95%) from the previous trading day, at the Hana Bank dealing room in Jung-gu, Seoul. The KOSDAQ opened at 1002.19, up 9.01 points (0.91%) from the previous trading day, and the won-dollar exchange rate started at 1171.3 won, down 2.4 won from the previous trading day (1173.7 won). Photo by Kim Hyun-min kimhyun81@

Samsung Biologics recently (on the 17th) joined the ranks of Hwangjeju (황제주). Hwangjeju refers to stocks with a particularly high price per share compared to other stocks. Typically, a stock price exceeding 1 million KRW per share is considered Hwangjeju.

Recently, Samsung Biologics' stock price rose due to expectations surrounding its contract manufacturing organization (CMO) agreement to produce COVID-19 vaccines for the U.S. vaccine manufacturer Moderna. The stock price, which was 829,000 KRW at the beginning of the year, surpassed the 900,000 KRW mark in May after signing a contract with Moderna for the COVID-19 vaccine drug product (DP). Furthermore, strong earnings in the second quarter, with operating profit reaching 166.8 billion KRW?double that of the previous year?also contributed to the rise. The stock price climbed to 1 million KRW. It is expected that once commercial production of Moderna’s COVID-19 vaccine drug product begins by next month, earnings will grow even further. The securities industry anticipates that Samsung Biologics’ stock price will stabilize in the 1 million KRW range around that time.

It is truly a 'golden' Hwangjeju, but some view it as a stock difficult to approach like an 'emperor.' The high price acts as a barrier to entry. Individual investors such as university students and housewives, who should invest in large, stable blue-chip stocks on a smooth path, see it as nothing more than an unattainable 'pie in the sky.' Conversely, this can be seen as forming an exclusive 'league' of investors who can afford to invest around 1 million KRW per share.

Other examples of Hwangjeju include Samsung Biologics (956,000 KRW as of the 24th closing price), LG Household & Health Care (1.45 million KRW), and Taekwang Industrial (1.03 million KRW). Stocks considered to be on the verge of becoming Hwangjeju include promising companies in the secondary battery sector such as LG Chem (787,000 KRW) and Samsung SDI (770,000 KRW), as well as Hyosung TNC (734,000 KRW) in the electronic materials sector and NCSoft (847,000 KRW) in the gaming sector. Unless these stocks undergo a stock split that divides one share into multiple shares, like Samsung Electronics, it is difficult for ordinary investors to access them.

To allow ordinary investors to access these high-priced Hwangjeju stocks, the financial authorities announced in August last year the introduction of fractional share trading. This system allows trading in fractional shares rather than whole shares. For example, if Samsung Biologics’ stock price is 1 million KRW per share and an investor has 100,000 KRW, they can purchase 0.1 shares worth 100,000 KRW.

However, even after a year, the system has not been implemented due to the complexity of the issues involved. In the case of domestic stocks, fractional trading raises problems such as losing protection under related laws like the Commercial Act, which defines stocks in units of one share, and the need to establish institutional measures regarding voting rights, which are exercised per whole share. The authorities are currently focusing on introducing fractional trading for overseas stocks first.

While the authorities’ deliberations continue, the stock fever is intensifying. In particular, the number of novice investors, known as "Joorini" (beginner stock investors), is rapidly increasing. The number of active stock trading accounts started at 35.48 million at the beginning of the year and exceeded 50 million earlier this month. This means that approximately 15 million new accounts were created in just eight months. It is expected to surpass 51 million next month (50.75 million as of the 24th). Interest in stocks is rising, but there are criticisms that the government’s response is too slow. The authorities need to accelerate their efforts so that these investors can take a safer and longer-term investment path.

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