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Retail investors’ ownership of Samsung Electronics stock doubles

Increase seems fueled by dividend payouts, stock gifts to children

A flag bearing the corporate logo of Samsung Group waves in front of its office building in southern Seoul. (Yonhap)
A flag bearing the corporate logo of Samsung Group waves in front of its office building in southern Seoul. (Yonhap)
Amid massive foreign sell-offs of Samsung Electronics, South Korea’s most valuable company, domestic retail traders’ stock ownership in the tech giant doubled this year, surpassing 13 percent for the first time, data showed Thursday.

Individual investors’ stock holdings of Samsung accounted for an all-time high of 13.08 percent of the total as of Wednesday. The previous record -- set at end-December last year -- was 6.48 percent, according to data compiled by the Korea Securities Depository.

Foreign investors’ total stake in the tech behemoth, however, fell to 52.02 percent from 55.73 percent over the cited period, data compiled by the Korea Exchange showed.

Retail investors purchased 394.2 million common shares of Samsung this year through Wednesday, accounting for about 6.6 percent of the company’s shares. They spent nearly 32.13 trillion won ($27.35 billion) to pick up shares that foreign and institutional investors offloaded. Offshore investors and institutions sold 242.9 million shares and 161.4 million shares, respectively.

While individual investors scooped up the tech giant’s shares, the stock price fluctuated widely. The closing price of the firm’s stock on the first day of trading this year was 83,000 won. It notched a yearly high closing of 91,000 won on Jan. 11. But since then it started to move downward, plunging as low as 73,900 won Wednesday on the back of a gloomy outlook in the chips industry.

In line with the massive net purchases, market insiders estimate the number of small shareholders in the nation’s largest company to exceed 5 million. Amateur investors appear to be interested in the company’s dividend payouts as well as in giving shares as gifts to children, based on their firm belief in the company’s sustainable growth.

Samsung Electronics paid out a dividend of 2,944 won per share, including its special year-end cash dividend, last year. That amounted to 3.69 percent of its share price as of end-December. The firm raised its quarterly dividends to 361 won per share from this year as well.

Amid near-zero interest rates since the central bank’s key rate cut last year, Samsung’s dividend yields have been higher than bank deposit rates.

An increasing number of parents appear to have chosen to give Samsung Electronics shares as a way of expanding children’s assets.

The number of Samsung Electronics shareholders who were under 20 years old came to 115,083 as of end-December, having multiplied nearly 90-fold over the past five years, data compiled by securities information portal SEIBro, operated by the KSD, showed.

Market insiders also said retail traders had high hopes for a price rebound despite global investment banks’ negative outlook for the tech giant and the memory chip market. Individual investors think now is the best time to seek profit from “undervalued stocks,” the insiders said.

Hong Kong-based investment bank CLSA revised its target price down for Samsung Electronics to 84,000 won Wednesday, from 86,000 won. US-based investment bank Morgan Stanley lowered its target price for Samsung a week ago, from 98,000 won to 89,000 won, while Goldman Sachs forecast that chip prices would enter a downward cycle in the fourth quarter.

“Retail investors have considered Samsung Electronics’ stock as one of the representative ‘national stocks’ that is believed to be relatively safer than other locally listed stocks. Although the share price has showed a lackluster performance so far this year, they think the stock will eventually surge the most (compared with other stocks listed on the domestic market),” an industry insider said.

A 34-year-old stock trader who preferred to remain anonymous told The Korea Herald that the return of Samsung’s vice chairman, Lee Jae-yong, would boost the tech giant’s shares. Though the recent stock movements were upsetting for the stock trader, the share price will exceed 100,000 won after the slump ends, he said.

Meanwhile, Samsung Electronics stock lost 1.08 percent to 73,100 won at Thursday’s closing bell. Since the market closing on Aug. 5, shares retreated for nine trading sessions until Thursday, except for Aug. 9 when it closed unchanged.

By Jie Ye-eun (