The Wall Street Journal (WSJ) published a story on October 1 (local time) that Samsung Electronics should consider going public on the New York Stock Exchange in order to open up to foreign investors and boost its stock price. However, many analysts of the Korean stock market believe that its listing would be questionable and meaningless.
The suggestion in the story is attributable to the fact that it is difficult for US investors to buy Samsung shares. The article pointed out, “Americans can invest in KOSPI 200 Exchange Traded Funds (ETF) or Technology Index Funds that include Samsung Electronics. But the possibility of exposure to other risks other than Samsung is too high,” adding, “A few active investors trade Samsung shares over-the-counter, but trading is rare. On top of that,there are problems with transparency.”
The WSJ article also said that Samsung’s listing on the New York Stock Exchange will benefit not only investors but also the company itself.
According to a report by market research firm Bernstein Research, Samsung Electronics recorded the best performance in Q2-Q4 this year, beating Apple in market share. Nevertheless, its stock price fell by 10% compared to December 2012.
Mark Newman, a Hong Kong-based technology analyst with Bernstein Research, commented, “Since it is not easy for foreigners to buy Samsung’s shares, trading volume is limited, which holds back the stock.”
According to the report, 1.4% of Apple’s market capitalization is traded daily, while the corresponding figure for Samsung is only 0.2%.
Mr. Newman remarked, “Taiwan Semiconductor Manufacturing Co. (TSMC) also sees 0.2% of its market cap get traded each day on the Taiwan Stock Exchange. But TSMC compensates for its weak trading through American Depositary Receipts (ADR) on the New York Stock Exchange.”
Korean analysts, on the other hand, doubt the benefit of Samsung’s listing on the New York Stock Exchange. A researcher at Korea Investment & Securities Co. noted, “The story about Samsung’s issuance of ADRs is not new. I think that it is not necessary, for the company has enough funds. If Samsung is listed in the US, the cost needed to go public and to remain in the stock exchange can exceed the benefits.”
On October 1, Samsung Electronics’ stock went up for four days in a row in the Korea stock market, since foreign investors purchased shares worth 136.7 billion won (US$127.5 million).