AmorePacific trades lower after stock splits

Shares of AmorePacific Co., South Korea's top cosmetics maker, closed lower on Friday as investors locked in profits upon its market comeback after a 10-day trading suspension for its 10-for-1 stock split.

Trading of Amore's shares has been put on hold since April 21 to prepare for lowering the face value of its common stocks from 5,000 won ($4.57) to 500 won, which increased the number of shares in circulation by tenfold.

Its shares began trading at 386,000 won in the main KOSPI market, but they fell 3.09 percent to close at 376,500 won as investors went on to cash in their profits from the sharp rally ahead of the suspension. The country's benchmark index, the KOSPI, edged down 0.26 percent on the same day.

A total of 1.09 million shares changed hands, about ten times more than the average daily turnover before the stock split. Its market capitalization was estimated at some 22 trillion won to take seventh place in the main bourse.

Amore opted for the stock split after its shares nearly tripled over the past year on the upbeat business outlook in the fast-growing Chinese cosmetics market, becoming the nation's most expensive stock.

The latest move comes as the local bourse operator and investors have put growing pressure on expensive shares to split their stocks in a bid to give easier access to retail investors and boost the overall trading volume.

Market watchers said the lagging performance was in line with other smaller local rivals, which have lost steam following a sharp rally that fueled concerns of a valuation bubble during the recent earnings season.

Amore's shares jumped over 30 percent in a period of one month after the company in early March announced its plan to divide its stocks.

Despite the tepid performance on the first day, market watchers remained positive about the leading cosmetic firm's long-term business outlook.

"Amore's shares are expected to rebound if retail investors buy its shares on its upbeat business prospects, as expectations remain high over its strong performance in China," said Ryu Yong-seok, an analyst at Hyundai Securities. (Yonhap)