On the afternoon of the 18th, employees in the dealing room at Hana Bank’s headquarters in Jung-gu, Seoul, are looking at the results of the decision of repatriation by Samsung Electronics Vice Chairman Lee Jae-yong through a monitor. On this day, the KOSPI index fell 2.33% to close at 3013.93. Reporter Kim Beom-jun [email protected]
The KOSPI index fell the most in 79 days. In addition to the desire to realize profits from foreigners and institutions, Jaeyong Lee Samsung Electronics(85,000 -3.41%) The sentence of vice chairman prison sentence worsened investor sentiment. The decline in the buying trend of individuals who have led the uptrend due to concerns that the domestic stock market will undergo a short-term correction also affected.
The KOSPI index closed at 3013.93, down 71.97 points (2.33%) on the 18th. The stock market fluctuated when Vice-Chairman Lee was sentenced to two years and six months in jail at the farewell hearing held that day. The KOSPI index, which started at 3085.90, sank to 3003.89 at one time during the week. The fall of the KOSPI index on this day was the largest since October 30 (2.56%) last year.
Shares of major subsidiaries of Samsung Group plunged, including Samsung Electronics’ drop of 3.41%. Samsung C&T(143,000 -6.84%)Silver 6.84%, Samsung SDI(706,000 -4.21%) Samsung Life Insurance(78,500 -4.96%) Etc. fell 4.21% and 4.96% respectively. The Samsung Group’s market capitalization decreased to 776 trillion won, evaporating 23 trillion won a day alone.
As the stock price plunged in response to the news of Vice Chairman Lee’s restraint, individuals who took this as an opportunity started buying at the last minute, but it was not enough to prevent the index from falling. At the beginning of the year, the ants, who had net purchases of trillions of won a day, only bought 5195 billion won in the stock market. Foreigners and institutions each sold about 200 billion won in holdings. The net selling amount of institutional investors who are selling stocks for seven consecutive trading days reached 11 trillion won this year alone. Kim Ji-san, head of the research center of Kiwoom Securities, said, “As Vice Chairman Lee was sentenced to imprisonment, decision-making such as new investments became inevitable. If the stock market that has led the stock market shakes with controversy over the stock market, short-term adjustment is inevitable.” did.
As the soaring stock market enters a correction phase, counter-selling is also increasing rapidly. Counter-trading, in which ants engaged in debt investment (investing due to debt) were forced to sell their stocks because they could not pay their debts, recorded 387 billion won, the maximum in 12 years on the 14th, followed by the aftermath until the 15th (23.1 billion won).
Concerns about’Absence of Vice Chairman Lee = Weakening Growth’… Is it possible to adjust the KOSPI?
At 2:23 pm on the 18th, the news that Samsung Electronics Vice Chairman Lee Jae-yong was arrested in court. Samsung Electronics’ stock price, which had been down by about 2.5%, started to move. Foreigners and pension funds poured out for sale. The share price of Samsung Electronics plunged 4.43% at the moment. The momentary shock reminded me of the time when Corona 19 was on the rise.
The securities industry is concerned that Vice Chairman Lee’s arrest will not end in a one-day event. This is because it could be a starting point that could have an overall negative impact on the domestic stock market, which had no other bad news. It is different from the time of arrest in the past that after Corona 19, rapid decision-making by companies and cooperation between owners emerged as an important variable for corporate competitiveness and stock price. It means an unexpected bad news appeared in the Korean stock market.
Samsung Electronics closed the transaction at 85,000 won, down 3.41%. This is the biggest drop this year. On this day, the decline was larger than the KOSPI index (-2.33%). The stock price of Samsung Electronics, the No. 1 market capitalization, was threatened by the KOSPI index of 3000.
The share price of Samsung Electronics, which has recently increased significantly, is said to be the biggest bad news. When Vice Chairman Lee was arrested in the past, the impact on the stock price was not as great as concerns. This is because the uncertainty caused by the constraints was first reflected in the stock price, and the conclusion was read as a relief to the uncertainty. It was not a final decision, and there was an expectation that the absence of the owner would not directly damage the corporate value.
But this time the atmosphere is different. For Samsung Electronics, this year’s DRAM price recovery and foundry boom coincided at the same time. As all business divisions respond quickly to the changes in Corona 19, this year’s operating profit is expected to reach 46 trillion won, a 30% increase from last year.
Samsung Electronics was selected as the company that can best respond to the 4th Industrial Revolution that will accelerate after Corona 19. They also have the capital to make quick decisions and invest. This is closely related to the decision of the owner. In particular, there was an expectation that Samsung Electronics would engage in a large-scale merger and acquisition (M&A) in the process of industrial restructuring. In this situation, the absence of an owner is an analysis that the possibility of deteriorating corporate competitiveness has increased.
Ik-jae Cho, an expert on Hi Investment & Securities, pointed out, “The stock price is performance, and in the end, the performance is a matter of how quickly a company adapts to change.”
This is expected to affect the supply and demand of the market. This is because investors who perceive the absence of an owner as deteriorating growth potential can throw stocks. On this day, foreigners and pension funds sold Samsung Electronics net worth 84.4 billion won and 44.6 billion won respectively.
Concern about adverse effects of affiliates
Shares of major Samsung affiliates also plummeted. Samsung SDI (-4.21%), Samsung Life Insurance (-4.96%), Samsung SDS(197,000 -3.19%)(-3.19%) etc. fell. Samsung C&T, a holding fire, plunged 6.84%.
The long-term impact of affiliates is also expected to be inevitable. The rapidly changing electric vehicle market is representative. As Vice Chairman Lee Jae-yong and Hyundai Motor Group Chairman Eui-sun Eui-seon met in May last year to discuss electric vehicle cooperation, cooperation between owners is important.
An official from the battery industry said, “As the electric vehicle market is rapidly changing and expandable, it is important to establish a network with other companies and to present the direction of the owner. If Lee is arrested, the decision-making process will inevitably be delayed.” Some are concerned that Samsung SDI may adversely affect the entire battery value chain at the center.
Was it stimulated to adjust the KOSPI?
Even after a few days of stock price correction, the biggest bad news for the Korean stock market was that it “rose too fast”. It was said that there were no major negatives except for the desire to realize profits. There are also concerns that the arrest of Vice-Chairman Lee, which occurred under such circumstances, could serve as the basis for the KOSPI mediation.
The KOSPI index’speeded’ from 2300 units in November last year to 3200 units in January this year. The individual’s strength was great, with investor deposits reaching 74 trillion won at one time. Samsung Electronics is the most held by individuals. It is an environment in which concerns about the arrest of Vice Chairman Lee can lead to a desire for profit-taking. The stock industry is concerned that the KOSPI index, which had risen to Samsung Electronics, may fall due to Samsung Electronics.
In addition, foreigners have a strong perception that Samsung Electronics is KOSPI. By reducing the proportion of Samsung Electronics, it is possible to sell the entire KOSPI mechanically. Some of the securities industry are also concerned that global ESG funds may be reluctant to sell or invest due to Lee’s arrest in the future.
Yoon Sang Ko/Jae Won Park/Reporter Hankyung [email protected]