[Column] Silent Struggles Among 6 Million Ants... Decoupling of Samsung Electronics and Hyundai Motor

[Asia Economy Reporter Lee Seon-ae] The hearts of 6 million retail investors (5 million for Samsung Electronics + 1 million for Hyundai Motor) watching the KOSPI market leaders Samsung Electronics and Hyundai Motor are burning up. Despite announcing earnings surprise results in the first quarter, their stock prices remain at their lowest levels.

As of the end of April, Samsung Electronics and Hyundai Motor's net profit proportions within the KOSPI are 26.4% and 4.0%, respectively. On the other hand, their market capitalization proportions within the KOSPI are only 18.25% for Samsung Electronics and 1.8% for Hyundai Motor. This means that the stock prices are not properly reflecting the earnings and are not moving in sync, showing a so-called decoupling phenomenon.

The main culprit of the decoupling(?) is foreign investors. In the case of Samsung Electronics, the foreign ownership ratio, which was around 55% two years ago, has fallen to 50.9%, approaching the lowest level since 2011. Hyundai Motor's foreign ownership ratio (26.8%) has also dropped to levels seen during the financial crisis.

In this situation, the support for the two companies' stock prices has come from retail investors' affection. Especially, the love for the national stock Samsung Electronics is absolute. Last month, despite hitting a '52-week low' 10 times, retail investors purchased as much as 4.5231 trillion KRW. Including preferred shares (596.6 billion KRW), about 5.1 trillion KRW was concentrated in Samsung Electronics. Individuals net bought a total of 7.1881 trillion KRW in the KOSPI market last month, of which 71.2% was focused on Samsung Electronics. The driving force that prevents the stock from falling to '50,000 won Samsung Electronics' and helps it hold on to '60,000 won Samsung Electronics' is precisely the love of retail investors.

Now is the time for Samsung Electronics and Hyundai Motor to take active steps. Even if they are not directly related to the decoupling phenomenon, they must not be indifferent to shareholders. They need to increase investment attractiveness and attract domestic and foreign investors. Samsung Electronics' move to encourage stock purchases not only among top executives but also key officers deserves applause.

However, continuous responsible management is necessary going forward. It is natural to face pressure to devise measures against stock price declines, and they must show sincerity in responsible management regarding this. They must no longer receive sharp criticism from experts that shareholder returns are insufficient compared to competitors and global companies, making it difficult to find triggers for stock price increases. This should be addressed before people keep shouting 'Apple' instead of 'Samsung Electronics' and 'Tesla' instead of 'Hyundai Motor'.

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