Samsung affiliates’ listed stocks lost 20 trillion won (US$17.64 billion) in market capitalization on July 14 after South Korea's presidential office, or Cheongwadae, dropped a bombshell in the last hour of trading. When Cheongwadae said it has found documents from the previous Park Geun-hye administration which what appears to be a presidential order to review the possibility of taking advantage of Samsung's management succession, the investors' confidence for Samsung affiliates’ listed stocks quickly cooled off and started selling their Samsung shares.
Samsung Electronics share price closed at 2,524,000 won (US$2,226.73) on July 14, down 4,000 won (US$3.53), or 0.16 percent, from the previous day. Its price, which started increasing on opening, went up to 2,555,000 won (US$2,254.08), reaching a new record for five days in a row. As major securities firms also announced the bullish outlook on Samsung Electronics one after another, Samsung Electronics’ stock was expected to close at a higher price on the same day. However, the company saw its stock price stay steady after 2pm and go down as foreign investors started selling their stocks at the news that Cheongwadae found the documents about Samsung’s management succession in a cabinet in an office previously used by the presidential secretary for civil affairs at 3:10 pm. Foreign investors net sold 39 billion (US$34.41 million) worth of Samsung Electronics stocks on that day.
The catch here is most of other group affiliates’ stocks, except for Samsung Electronics, closed down. Fourteen out of 16 Samsung affiliates’ listed stocks, excluding preferred stocks and Samsung Card (0.52%) and Cheil Worldwide (1.37%), closed down. In particular, the share price of Samsung C&T and Samsung Life Insurance, which are categorized as stocks related to the group’s governance structure along with Samsung Electronics, showed a sharp decline by 3.11 percent, while that of Samsung SDS decreased 2.93 percent.
At the closing price on the 14th, the combined market capitalization of 16 Samsung affiliates’ listed stocks stood at 469.47 trillion won (US$414.18 billion), down 20 trillion won (US$17.64 billion) from the previous day. Samsung Group’s market capitalization, including preferred stocks, surpassed 500 trillion won (US$441.11 billion) for the first time on the 12th but went down below 500 trillion won (US$441.11 billion) after two days.
An official from the investment banking industry said, “While the trial for Samsung Group’s transfer of management control is under way, the documents from the previous Park Geun-hye administration were found. Accordingly, growing concerns that documents could be used as evidence against de facto Samsung Group leader, Lee Jae-yong, were reflected in the market.”