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THE INVESTOR
May 09, 2021

Samsung

[DECODED: SAMSUNG] Samsung's reigning presence in Korean equity market

  • PUBLISHED :July 18, 2016 - 17:07
  • UPDATED :July 18, 2016 - 18:12
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[THE INVESTOR] When the global consumer tech market thought smartphones had run dry and become a commodity, Samsung Electronics proved it wrong by announcing that its operating profit reached over 8 trillion won for the first time in 2 years.


Samsung Electronics' flagship store in Seocho-dong, southern Seoul


Samsung's stock prices have also reached historic highs. On July 14, they hit 1.5 million won (US$1316) for the first time in a year and four months. On July 18, it closed at 1.53 million won. 

Given that Samsung Electronics boasts the largest market capitalization, it would be safe to say that its rising stock value has boosted the entire market, which has shot past 2,000 points.

“Samsung’s improved earnings will bring a positive effect on (the prospects of) companies not only on the KOSPI but also KOSDAQ,” said Kim Jin-young, an analyst at NH Investment & Securities, noting that the Korean tech sector’s combined operating profits account for about 28 percent of the total.

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Patterns since 2010 showed that an increase in Samsung Electronics’ operating profit has had “positive correlations” with other tech companies ranging from displays, chips to headsets and consumer electronics listed on the KOSPI, he added.

Extremely high correlations between Samsung and the market come from the fact that the tech giant takes the lion’s share of around 20 percent in almost any kind of businesses in Asia’s fourth largest economy.

Samsung is the most liquid company on the KOSPI 200 futures, accounting for more than 20 percent of the index tracking 200 blue chips, not to mention to being the most sought-after stock by foreign investors. Its market cap takes up around 16 percent of that of the KOSPI.

About 20 percent of Korea’s growth come from Samsung selling chips, smartphones and other consumer electronics both at home and abroad -- mostly overseas as 80 percent of its profits are from abroad, especially China. 

Besides its flagship tech business, Samsung Group practically has its hand in almost everything -- construction, power plants, shipbuilding, financial services, advertising and health care services -- with foreign media often describing South Korea as “the Republic of Samsung.”

As it has become big and untouchable, often not responding to calls from regulators as seen in 2004 and 2005 when Samsung Electronics shunned antitrust probes, some say the Korean economy, including the press, has become a “slave” to the conglomerate.

Although its dominant position over the economy could be disturbing, the Samsung brand should be noted for its drive to become a global top player, industry watchers say.

By Park Hyong-ki / The Korea Herald (hkp@heraldcorp.com)

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