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Samsung Group market capitalization rises above W700tr for first time

Market watchers forecast Kospi to move in 2,700-2,780 range in last week of 2020 trade

Samsung Group headquarters buildings in Seoul (Yonhap)
Samsung Group headquarters buildings in Seoul (Yonhap)
Boosted by the surge in stock prices of key affiliates, the combined market capitalization of Samsung Group’s listed firms exceeded 700 trillion won ($636 billion) for the first time, data from the Korea Exchange showed Sunday.

As of Thursday, the market cap of 23 listed stocks of the nation’s telecom-to-chemicals conglomerate came to 719.13 trillion won, soaring over 200 trillion won within the year. It is also the first time that a local group’s total market valuation has topped 700 trillion won.

The group’s combined market cap was nearly 1.3 times the government budget for 2021, set for 556 trillion won. The valuation is more than four times that of SK Group, the second-largest conglomerate by market valuation, with a market cap of some 171.26 trillion won.

When the nation’s main bourse Kospi hit its rock bottom over market fears on COVID-19 on March 19, Samsung affiliates’ market valuation had decreased to nearly 382.6 trillion won, from 514.11 trillion won at the end of 2019.

But since the passing of late group Chairman Lee Kun-hee on Oct. 25, the combined market cap has surged 28 percent from 561.82 trillion won in just two months.

Largely affected by expectations of dividends and a recovering semiconductor market, shares of the group’s key affiliates including crown jewel Samsung Electronics have soared lately. The surge in the stock prices further increased the group’s weight on the Kospi to 37.1 percent, from 34.8 percent at the end of last year.

While blue chip Samsung Electronics and its preferred shares’ combined market valuation surpassed 500 trillion won, other preferred stocks’ market caps also largely increased. Preferred stocks of Samsung Heavy Industries saw the largest increase of 467.8 percent, followed by Samsung SDI and Samsung Electro-Mechanics with 207.7 percent and 78.4 percent, respectively.

Buoyed by major Samsung affiliates’ stocks rise on the back of a chip rally, the main bourse crossed the 2,800 mark for the first time Thursday. The Kospi closed at 2,806.86, up 47.04 points or 1.7 percent, from the previous session’s close. Samsung Electronics’ shares also advanced 5.28 percent to 77,800 won on the same day.

As the last week of stock trading this year has approached, local brokerage houses predicted the band of the Kospi to move in the 2,700-2,780 range, slightly lower than its all-time closing high set in the previous session. Market watchers pointed to the ex-dividend effect as the biggest uncertainty in the stock market.

“Stock market will not face a breakaway from the upward trend in the mid- to long-term. But due to factors such as the year-end dividends scheduled for Tuesday and the previous 12-month price-earnings ratio reaching nearly 13 times may adjust indexes’ directions,” said Kim Dae-joon, an analyst at Korea Investment & Securities.

NH Investment & Securities analyst Noh Dong-kil also warned investors to be aware of the upcoming ex-dividend day. At the same time, he forecast that foreign investors are likely to turn to net buyers of some large-cap stocks in sectors such as semiconductors, secondary batteries and health care after the unfavorable event.

Some experts also said that US political uncertainties are another volatility to the local market. President Donald Trump opposed signing the $900 billion coronavirus aid package passed by lawmakers in the US on Dec. 21. Instead, he urged them to make several changes to the bill, including increasing direct payments for Americans.

“Stock rallies spurred by vaccine hopes have been offset by the new COVID-19 variant and investor sentiments have further weakened by Trump’s refusal,” said Ahn So-eun, an analyst at IBK Securities. “Since the political instability is expected to continue until early next year, investors need to keep the uncertainties in mind.”

By Jie Ye-eun (yeeun@heraldcorp.com)
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