Financial authorities are closely monitoring the transactions of Samsung Electronics’ shares as they continued to decline, market sources said Wednesday.
Shares of Korea’s most liquid blue chip continued its losing streak, spiraling down over the last five trading days despite efforts by its executives to alleviate concerns over the global sales of its flagship smartphones.
Samsung Electronics closed at 1,358,000 won ($1,197), a drop of 0.29 percent, or 4,000 won, along with a further dip in the broader stock market where the benchmark KOSPI dropped 0.56 percent to 1,909.91.
Negative factors concerning a possible exit from quantitative easing in the U.S. and inaction by the Bank of Japan for fresh monetary stimulus spilled over to Korea and eroded confidence in its equities, compounded with news of failing to be included in Morgan Stanley Capital International’s developed markets index for the fifth time, analysts said.
The continuous slide of Samsung Electronics shares, triggered by JPMorgan Chase’s negative outlook for the tech giant’s Galaxy S4 sales, prompted Korean financial authorities to closely monitor the country’s biggest traded stock to look for signs of irrational activity among foreign investors.
The report by the foreign investment bank -- which cut down its projection of Samsung Electronics’ price per share from 2.01 million won to 1.9 million won due to lackluster sales of its latest smartphone -- drove foreign investors to unload their Samsung stocks en masse.
Samsung’s mobile chief Shin Jong-kyun downplayed the report saying that the investment bank has overstated and overestimated its forecast, and told the press that the company’s sales of the Galaxy S4 are “doing well,” without disclosing its figures.
But his assurance was not enough to put out the ongoing fire-sale by foreign investors as market concerns persisted that Samsung Electronics may have hit a “peak” as the global premium smartphone markets have matured, and may be losing its innovative edge like its rival Apple.
Foreign equity ownership in the tech giant sank to a three-year low to below 49 percent of its outstanding tradable stocks, down from more than 50 percent in March this year, according to the Korea Exchange.
The downward equity path of Samsung Electronics resembles that of Apple, which has lost much of its innovative momentum since the 2011 death of Steve Jobs, the creator behind iPods and iPhones.
The U.S. tech company’s release of the iPhone5 did not garner much attention, with many analysts and tech watchers saying that there was nothing new with its latest upgraded smartphone.
Apple share prices have lost almost 40 percent since its record high of $702 in September last year.
Samsung Electronics’ Galaxy S4 did not receive many rave reviews either, with only a few additional functions added to its new smartphone. Its shares have fallen from a 52-week high of 1,584,000 won.
However, analysts forecast an equity rebound for Samsung Electronics given that it is the world’s leading smartphone, display and semiconductor maker.
“Its price-earnings ratio of 5 is too low compared to 10 in 2006,” said Gwak Hyun-soo, analyst at Shinhan Investment, adding that it is being traded at a discounted price that should rebound to its fair market value reflecting its leadership in various tech parts and products.
By Park Hyong-ki
(hkp@heraldcorp.com)
