'Samsung Electronics Humiliation' Ignored by Individuals, Foreigners, and Institutions Alike... Lowest Stock Price and Shareholding Ratio "Accelerating Departure"

[Asia Economy Reporter Lee Seon-ae] Foreign investors and institutions are turning their backs on Samsung Electronics. The foreign ownership ratio has fallen to its lowest level this year. The stock price is also near a 52-week low, indicating a bottom range. Despite being the top blue-chip stock on the KOSPI, its returns are underperforming the market, leading to a cold outlook from the securities industry.

According to the Korea Exchange on the 5th, Samsung Electronics fell close to its 52-week low (68,300 KRW) during the trading session the previous day, setting a record low for the year. It opened at 68,900 KRW and dropped to 68,600 KRW during the session. This is not far from the 52-week low of 68,300 KRW. The last time Samsung Electronics closed at the 68,000 KRW level was on October 13 last year (68,800 KRW). The stock price decline this year is 12%, which is greater than the KOSPI's decline of about 8%.

The decline in stock price was driven by net selling from foreigners and institutions. Foreign investors sold about 93.2 billion KRW the previous day. Institutions, including financial investment, insurance, trust, and pension funds, collectively net sold about 35.6 billion KRW. On that day, Samsung Electronics became the top stock in net selling by foreigners and institutions. From the beginning of this year until the previous day, foreigners and institutions have continuously sold Samsung Electronics, with net selling amounts totaling 1.2706 trillion KRW and 5.3928 trillion KRW, respectively.

The foreign ownership ratio is showing warning signs of falling below 50%. The foreign ownership ratio of Samsung Electronics was 51.61% the previous day, the lowest this year. On January 2, 2020, and January 4, 2021, the foreign ownership ratios were 56.81% and 55.73%, respectively. Over the past two years, it has maintained an average of about 53-54%, but has been steadily decreasing this year.

Foreign investors' selling of blue-chip stocks is linked to an overall exit from the Korean market. Samsung Electronics is a mega-cap stock with a market capitalization exceeding 400 trillion KRW. It is the easiest stock for large investors seeking liquidity to sell. Foreigners have net sold nearly 5 trillion KRW in the KOSPI market alone over the past month.

The biggest reason foreigners are leaving the domestic market is the exchange rate. Since the beginning of this year, the U.S. Federal Reserve's tightening policy has intensified, and the Russia-Ukraine war has caused a sustained strong dollar trend. Experts analyze that if there is no confidence that Samsung Electronics' stock price will rise, foreigners adjust their holdings considering foreign exchange losses.

Although individual investors are net buying Samsung Electronics to support the stock price, the stock appears trapped around the "60,000 KRW" level, leading to fatigue and an expected acceleration of outflows this year. In fact, the number of Samsung Electronics' small shareholders decreased by 2.4% (122,453 people) from 5,188,804 at the end of Q3 last year to 5,066,351 at the end of last year. This is the first decrease in the number of small shareholders since Q4 2019. Until now, the number of small shareholders showed an increasing trend, rising nearly fourfold from 568,313 at the end of 2019 to 2,153,969 at the end of 2020 within a year. The number continued to increase to 3,867,960 at the end of Q1 last year and 4,546,497 at the end of Q2 last year, surpassing 5 million for the first time among domestic companies at the end of Q3. However, as the stock price shrank to the 60,000 KRW range and showed sluggish performance, shareholders turned away.

There are also moves by securities firms to lower their target prices for Samsung Electronics. Shinhan Financial Investment lowered its target price from 105,000 KRW to 97,000 KRW, SangSangin Securities from 82,000 KRW to 77,000 KRW, and Eugene Investment & Securities from 93,000 KRW to 88,000 KRW. Lee Seung-woo, head of the research center at Eugene Investment & Securities, explained, "Although the annual operating profit estimate for Samsung Electronics this year was revised upward from 56 trillion KRW to 58 trillion KRW, the operating profit estimate for next year was lowered by about 8% from 55.7 trillion KRW to 51.3 trillion KRW, leading to a downward revision of the target price. However, considering that the current stock price is at the lower end of this year's estimated price range, we believe there is a high possibility of an increase in the 2nd to 3rd quarters."

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