[Top 10 Groups Market Cap] 170 Trillion Lost in First Half... "Second Half Won't Be Easy Either" (Comprehensive)

Semiconductor Demand Contraction Hits Hard
SK Hynix and Samsung Electronics Plummet
Inflation and Reduced Consumer Spending Power
Emart Also Loses 1.4 Trillion Won
Hyundai Motor Shows Solid Global Performance
LG and Hyundai Heavy Industries See Growth
Complex Crisis Continues Amid Semiconductor Uncertainty and Ukraine War, Breakthrough Needed

[Asia Economy Reporter Yoo Hyun-seok] The market capitalization of South Korea's top 10 conglomerates has decreased by 170 trillion won over the past six months. Stock prices have been significantly influenced by performance affected by the economic downturn, as well as the presence or absence of future growth prospects and innovation stories.

On the 20th, Asia Economy analyzed data commissioned from financial information firm FnGuide, revealing that the market capitalization of 109 stocks from the top 10 groups (including 11th-ranked Shinsegae instead of 10th-ranked Nonghyup) stood at 1,164.8947 trillion won as of the 15th. This represents a 12.64% decrease compared to 1,333.5804 trillion won on December 31 of last year. In monetary terms, it decreased by 12.65% from 1,333.5804 trillion won to 1,164.8947 trillion won as of the 15th of this month, meaning 168.6857 trillion won has vanished.

Among the top 10 groups, SK Group experienced the largest drop in market capitalization. During the same period, it fell from 211.2331 trillion won to 155.3872 trillion won, a 26.44% (55.8459 trillion won) decrease. Retail powerhouse Shinsegae Group recorded -23.97%, and POSCO, once a symbol of smokestacks, declined by -20.52%. Following were ▲Samsung (-19.84%) ▲Hanwha (-19.13%) ▲GS (-18%) ▲Hyundai Motor (-10.81%) ▲Lotte (-9.17%).

As most of the top 10 conglomerates' stocks traced downward curves, the stock market also experienced repeated weakness in the first half of this year. Experts analyze that concerns over the global economic downturn were reflected in stock prices. Hwang Se-woon, a researcher at the Korea Capital Market Institute, stated, "The risk of an economic recession must be considered significantly reflected," adding, "When a recession occurs, it ultimately leads to a decrease in corporate sales and operating profits."

A detailed look at the changes in market capitalization of the top 10 groups shows that sectors sensitive to the economy experienced larger declines. This implies that growing concerns about a global economic downturn negatively affected perceptions of companies. With the worldwide 'three highs'?high inflation, high exchange rates, and high interest rates?along with the resurgence of COVID-19, concerns about an economic recession are deepening, making the outlook for the second half bleak. As sales decline and profits are damaged, companies are expected to face considerable difficulties in finding breakthroughs.

◆The greater the demand contraction concerns, the more market capitalization falls= Analyzing the market capitalization of the top 10 groups shows that those owning sectors expected to experience demand contraction due to the economic downturn saw larger decreases in market capitalization.

From December 31 last year to the 15th of this month, SK Group, which showed the largest decrease among the top 10 groups (-26.44%), saw 24 trillion won evaporate from SK Hynix alone. Samsung Group's performance was also gloomy. Samsung Group's market capitalization dropped 19.84% from 729.8449 trillion won to 585.0087 trillion won. Although the decline rate was less than SK Group's, the amount equates to about 140 trillion won. Among this, Samsung Electronics' market cap fell from 526.0235 trillion won to 403.1989 trillion won, losing over 120 trillion won.

The common factor among them is semiconductors. The semiconductor industry is currently facing concerns about demand contraction due to the economic downturn. SK Hynix recently showed signs of instability by deciding to postpone the expansion of its Cheongju plant.

Shinsegae Group, which shrank by more than 2 trillion won, was heavily impacted by its large supermarket, E-Mart. E-Mart's market capitalization dropped from 4.2092 trillion won to 2.8294 trillion won during the same period, a decrease of 1.4 trillion won. This is interpreted as being influenced by global inflation and reduced consumer spending power.

For POSCO Group, POSCO Holdings underperformed. The group's market capitalization fell from 39.5103 trillion won to 31.4010 trillion won, a decrease of 8 trillion won. Among this, POSCO Holdings declined from 23.9328 trillion won to 19.5299 trillion won, retreating by over 4 trillion won. This is attributed to concerns over demand contraction in the steel sector, which accounts for the largest share of POSCO Holdings' business.

Hyundai Motor Group's market capitalization decreased by 10.81%, which is relatively better than the overall top 10 groups' decline of 12.65%. Hyundai Motor's market cap fell from 50.9674 trillion won to 44.8589 trillion won, a decrease of about 6 trillion won, while Kia's dropped from 33.3209 trillion won to 32.0642 trillion won, a reduction of 1.3 trillion won. Despite concerns over the supply of automotive semiconductors, they are expanding their market share globally. Especially in the electric vehicle sector, considered the future car market, they are showing results. According to energy market research firm SNE Research, Hyundai Motor and Kia ranked 5th globally in electric vehicle sales in the first half of this year with 248,000 units sold.

On the other hand, some groups saw an increase in market capitalization. LG Group recorded 93.6 trillion won as of the 15th, boosted by the listing effect of LG Energy Solution. Hyundai Heavy Industries Group also rose by 2.17%, from 25.3379 trillion won to 25.8869 trillion won. Hyundai Heavy Industries increased from 8.4512 trillion won to 10.1201 trillion won, an increase of about 2 trillion won. Hyundai Mipo Dockyard also grew from 2.7960 trillion won to 3.1754 trillion won, an increase of about 400 billion won. These companies benefited recently from increased demand for eco-friendly energy and the Russia-Ukraine war.

◆Gloomy outlook for the second half amid complex crises= Except for some sectors, the outlook for the second half remains bleak. There are no signs of a rebound strong enough to lift the stock prices of major groups. The unprecedented complex economic crisis of high inflation, high exchange rates, and high interest rates continues, rapidly freezing the global economy. The outlook for the semiconductor industry, which is highly sensitive to economic conditions, is uncertain.

The global DRAM market, which entered a full-scale decline from the second half of last year, is expected to continue falling for some time due to the prolonged Russia-Ukraine war, inflation, and China's economic slowdown leading to weakened IT demand. Steel prices have recently fallen, raising additional concerns about demand contraction. According to Korea Resource Information Service, iron ore prices rose from $89 per ton in November last year to $159 per ton in April this year but have since dropped to around $104.

Automobile deliveries are currently delayed, but due to the economic downturn, demand could decrease at any time.

In particular, the depreciation of the Korean won has significantly increased import prices such as raw materials, leading to reductions in domestic companies' investment plans and employment. A business community official said, "Stock prices cannot be said to fully reflect or show corporate management conditions or industry trends," but added, "Concerns about the global economic downturn are clear, and companies must devise self-help measures amid the crisis."

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