Samsung Electronics Hits 52-Week Low on 'Record High Earnings' Announcement Day... "Everyone Sells, Only Ants Buy"

[Asia Economy Reporter Lee Seon-ae] Samsung Electronics, the top company by market capitalization on the KOSPI, has tarnished the reputation of the market leader. Although it announced record-breaking first-quarter earnings on the 7th, its stock price closed at a new 52-week low, showing a sluggish trend. It remains stuck in the '60,000 won Samsung Electronics' status.

On that day, Samsung Electronics closed at 68,000 won. Having closed at 68,500 won the previous day, it set a new record for the lowest closing price this year. It also hit a new 52-week low. Compared to the intraday high of 75,800 won recorded on January 21 this year, it has dropped about 10.29% in roughly two months. Compared to the intraday high of 80,800 won on December 24 last year, it has fallen by 15.84%. The last time the closing price was in the 68,000 won range was on October 13 last year (68,800 won).

Moreover, despite Samsung Electronics announcing record-breaking quarterly earnings that exceeded market expectations on that day, the market ignored it. Samsung Electronics revealed in its preliminary first-quarter earnings report that it recorded sales of 77 trillion won and an operating profit of 14.1 trillion won. Compared to the same period last year, sales and operating profit increased by 50.3% and 17.8%, respectively. Compared to the previous quarter, they increased by 0.6% and 1.7%, respectively. Notably, the operating profit is the second highest ever for a first quarter, following 2018 (15.64 trillion won). These results surpassed the consensus (average forecast by securities firms). Previously, financial information provider FnGuide had forecast Samsung Electronics' first-quarter sales and operating profit at 75.2565 trillion won and 13.1106 trillion won, respectively. The sales figure marks the first time quarterly sales have exceeded 70 trillion won.

So why hasn't the stock price rebounded despite these strong results? Because investor sentiment has not recovered. Both institutional and foreign investors have been offloading large amounts of Samsung Electronics shares, weighing down the stock price. Foreign investors have shown net selling for 10 consecutive trading days from the 25th of last month to this day. Institutions have also joined in, selling for five consecutive trading days from the 1st of this month to this day. Only individual investors have been effectively absorbing the supply and continuing to buy.

Foreign investors sold Samsung Electronics shares worth 1.0168 trillion won in the first quarter alone. The general view is that foreign investors will not return despite Samsung Electronics' strong performance. This is due to the reasons behind the selling. Since Samsung Electronics' fundamentals are not the reason for the selling, even if earnings reach record highs and fundamentals strengthen, foreign investors are judged unlikely to switch to buying.

Foreign investors are focusing on selling the leading stock Samsung Electronics, which they hold a large stake in, as they reduce their exposure to emerging market assets amid overlapping geopolitical risks and inflation. As a result, the foreign ownership ratio in the Korean market is currently at its lowest level in six years. The biggest reason for foreign investors leaving the Korean market is the exchange rate. Since the beginning of this year, the Federal Reserve's tightening stance has intensified, and the Russia-Ukraine war has broken out, sustaining a strong dollar trend. Ultimately, foreign investors' return to Samsung Electronics depends not on 'earnings' but on a combination of 'changes in the global macro environment and dollar stabilization.'

Kim Young-hwan, a researcher at NH Investment & Securities, pointed out, "Samsung Electronics' stock price is mainly influenced not by earnings but by the global semiconductor market conditions and the attractiveness of emerging markets centered on manufacturing from a global asset allocation perspective."

There is also a possibility that the stock price will undergo further correction. Kim Jang-yeol, a researcher at Sangsangin Securities, said, "The consensus operating profit figure of around 13 trillion won for the first quarter will hardly affect the stock price. If macro issues show no signs of resolution and internal issues make no concrete progress, the stock price could fall below the mid-60,000 won range in the short term."

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