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| Samsung Seocho Tower, which houses the conglomerate's consumer electronics, life insurance and battery-manufacturing affiliates, is seen in this file photo. Korea Times file |
By Kim Yoo-chul
Investors are anxiously awaiting the resumption of trading of ordinary Samsung Electronics stocks on the country's main bourse in hopes that the company's decision for a 50:1 stock split would lift the stock value.
On Monday, the main bourse operator, Korea Exchange (KRX), said the trading of Samsung Electronics will be resumed May 4 as the stock will be offline until Thursday.
"KRX will complete the procedural process of its 50:1 stock split and the trading of Samsung stocks will be resumed Thursday with new bid quotes as previously announced," said a KRX spokesman.
The timing is good as an agreement between President Moon Jae-in and North Korean leader Kim Jong-un will seek to end a seven-decade war this year and the pursuit of the "complete denuclearization" of the Korean Peninsula would cut its "geopolitical risk."
Strategists and fund managers have said in the past that the KOSPI index could surge if the geopolitical risk is removed. Samsung's portion on the index as a percentage of total assets was 17.4 percent as of last year, said KRX.
The stock split is the major news for Samsung and investors. Listed for about 2.5 million won or some $2270 per share, this limits liquidity, particularly among the retail segment.
"This should increase liquidity, making the stock more appealing to a wider set of investors from institutional investors to individual investors," said a senior hedge fund manager from a European bank operating in Seoul by telephone.
Kim Min-jeong, a 38-year-old office worker who described herself as an "active daily-based stock trader," said she wants to rearrange her investment portfolio with more exposure to Samsung stocks.
"I expect wider accessibility and affordability of Samsung Electronics stocks from May 4. One interesting point is more high-profile traders in the country's most-affluent Gangnam area are set to change their investment portfolios. I expect Samsung stocks to continue with volatile sessions for the next few months or trading sessions after trading will be resumed. But seeing lots of hands-in and hands-out is just good for stocks, so this will be applied to Samsung," she said.
Given last week's 2,650,000 won (per share) closing price of Samsung Electronics on the bourse, the bid quotes of Samsung will be reset at 53,000 won per ordinary share.
As Samsung separately announced its boosted dividends policy as well as the stock split, the company's commitment to continue the longer-term trend of more shareholder returns will also be another plus factor. This year, the total dividend will jump to 9.6 trillion won or a 3 percent dividend yield based on last week's share price.
Additionally, its better-than-expected first quarter performance and upbeat outlook could strengthen investor sentiment on its stocks, said Euh Kyu-jin at E-Best Investment in Seoul, adding Samsung is forecast to earn 67.8 trillion won as its operating profit this year, a record if accomplished.
Its first quarter revenue was 60 trillion won while operating profit during the January-March period was 15.64 trillion won on very solid memory chip demand. That defied concerns that the global memory chip industry may have topped out amid increasing output.
But more stocks mean increased volatility, literally, and may be prone to stock price manipulation as there will be more short-term gainers, said strategists and fund managers.
