As Samsung Electronics Vice Chairman Lee Jae-yong is arrested in court, the fears of Donghak ants who have invested in Samsung Electronics are growing. Amid widespread concerns that the owner’s void will fuel the downtrend, there is also a cautious argument that stock prices and restraints are separate issues.
Earlier, Vice-Chairman Lee was sentenced to two years and six months in prison for bribery, and was imprisoned in court at a repatriation trial held on the 18th. Vice-Chairman Lee was arrested for the second time since February 17, 2017 (353).
Samsung Electronics’ stock price, which had been sideways in the late 80,000 won after breaking through ‘90,000 electrons’ on the 11th, ended at 85,000 won, down 3.4% from the day before the day Vice Chairman Lee was arrested. As of 12:40 pm on the 19th, Samsung Electronics’ stock price is trading at 8,7900 won, a 3.4% rebound from the previous day.
Individual investors who have invested in Samsung Electronics are beating their hearts, fearing the possibility that Vice Chairman Lee’s vacancy will act as a long-term bad news. In the stock-related online community on this day, investors who responded calmly saying, “The stock price only follows performance, and this vice chairman’s arrest is neither good nor bad.” Showed. One investor complained to the online community, saying, “Why am I getting the punishment for Lee Jae-yong, but the crime was committed by Lee Jae-yong?” and drew a’laugh’ response from many investors.
If so, will Vice Chairman Lee’s vacancy actually affect Samsung Electronics’ share price? In the past, it is rare for Samsung Electronics to be shaken by the owner gap. In fact, on February 17, 2017, when Vice Chairman Lee was first arrested, the share price of Samsung Electronics fell 0.42% from the previous day to 1893,000 won (before the face-to-face split), but rebounded to 1933,000 won (2.11%) the next day. The share price of Samsung Electronics, which rose by surpassing 2.5 million won in July, reached 2396,000 won (based on the closing price) on February 5, 2018, when Vice Chairman Lee was sentenced to probation and released. This is a price increase of 26.6% compared to the day of arrest.
The same is true of the late Chairman Lee Kun-hee, the father of Vice Chairman Lee. Chairman Lee retired from the front line due to the slush fund incident on April 22, 2008, and returned two years later on March 24, 2010. On April 23, the day after Chairman Lee’s retirement, Samsung Electronics’ stock price fell 3.26% to 653,000 won compared to the previous day, but soon rebounded and reached 740,000 won on May 30, a month later.
After that, the decline continued, and when the stock price fell to 407,500 won on October 24 of the same year, opinions were raised that Chairman Lee’s void had an effect. However, the share price of Samsung Electronics, which continued to rise after reaching the bottom, closed at 819,000 won on March 24, 2010, the date of Lee’s return. Compared to Chairman Lee’s retirement date, the price is up 21.3%.
For this reason, it is also diagnosed that Samsung Electronics’ share price is not affected by the owner’s gap. In fact, Samsung Electronics recorded an operating profit of 53.6 trillion won, which nearly doubled from the previous year (29.20 trillion won) thanks to the global semiconductor boom in 2017, when Vice Chairman Lee was under arrest. Although there was a negative issue of owner vacancy, the stock price was rather driven by earnings.
In 2008, when Chairman Lee Kun-hee declared his business resignation, its operating profit fell to 630 trillion won, a significant decrease from the previous year, and the stock price was sluggish. However, the following year, 2009, when the operating profit increased significantly to 10.92 trillion won, the stock price recovered. In the end, the impact of earnings was greater than the risk of an owner gap.
Of course, it is still difficult to predict how Vice Chairman Lee’s legal arrest will affect Samsung Electronics’ share price in the future. Although the Kookjeong Nongdan trial is in the final stage, there are still trials related to the alleged merger between Cheil Industries and Samsung C&T, so if the gap is prolonged, the possibility of negatively affecting the stock price cannot be ruled out. On the other hand, as the outlook for a’super cycle’ (long-term boom) will arrive as the semiconductor industry improves significantly this year, the share price may continue to rise due to earnings improvement. As various variables remain, investors’ careful judgment is expected.
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