Samsung Electronics shares soared 19.3 percent in January this year, marking the largest increase for the month in 18 years, since they rose 39.24 percent in January 2001.
Industry watchers say the lead cause for the rally is likely to be a buying spree by foreign investors.
Foreigners bought some 2.33 trillion won worth Samsung shares in January -- the largest amount since March 2000, when foreign investors purchased 2.07 trillion won. This caused the share price to surge after hitting an annual low of 36,850 won (US$32.80) on Jan.4.
The recent uptick in Samsung stocks have caused local brokerages to adjust their target price. Daishin Securities raised its target price from 46,000 won to 50,000 won while Mirae Asset Daewoo forecast the shares could go up to 57,000 won. Its previous price target was 50,800 won.
Since the second half of last year, global chip companies and smartphone makers have been struggling with sluggish demand.
Market watchers cited inventory adjustments of data center operators and the highly competitive smartphone market as some of the reasons behind the downturn. Samsung shares, as a result, came under pressure during the last quarter of 2018. Analysts had forecast the downward move of the shares to continue throughout the first half of 2019, but they are now thinking this may not be the case.
Although chipmakers could continue to suffer from the falling demand in the first half, things could improve in the latter half of this year, according to market analysts.
“If the existing inventory of chips (held by data center operators) runs out with prices hitting lows in the first half, the global market could gradually recover in the latter half,” said Song Myung-sub, an analyst at Hi Investment and Securities.
In the fourth quarter of 2018, Samsung earned 10.8 trillion won in operating profit, down 18.2 percent from a year earlier. Its sales came in at 59.27 trillion won, down 10 percent on-year.
For 2018, the tech firm posted record operating profit and sales of 58.89 trillion won and 243.77 trillion won, respectively.
By Kim Young-won (firstname.lastname@example.org)