Some analysts says that Samsung Electronics' cancellation of treasury stocks alters the supply-demand and sales patterns of foreigners, easing the stock market’s inclination toward IT and semiconductor stocks. Foreigners who have been able to maintain a proper stake due to the disposition of treasury stocks are buying stocks of other industries such as steel, banking and insurance with the profit made via investment in IT and semiconductor stocks.
According to Yuanta Securities, Samsung Electronics, which operates a buyback program this year, divest treasury stocks on two occasions. Samsung Electronics purchased a total of 1.02 million treasury stocks from January 25 to April 10 and cancelled all of them on April 21. The second purchase of treasury stocks has been made since April 28 and will be made until July 27. A total of 900,000 shares will be purchased. As of July 19, 885,600 treasury shares were bought and are expected to be cancelled before July 27. Apart from it, Samsung Electronics divested 8.99 million treasury shares on May 23.
The cancellation of Samsung Electronics' treasury stocks provided an opportunity for foreign investors to adjust their investment portfolios not only by maintaining appropriate stakes in the company, but also by taking profits from selling their shares. Foreigners net-sold Samsung Electronics shares worth 45.7 billion won (US$41 million) from May 23 to July 19 when Samsung Electronics cancelled many treasury stocks, but on the contrary, their holdings rose from 50.1% to 53.9%. As Samsung Electronics divest treasury stocks, the ratio of Samsung Electronics’ treasury stocks fell sharply, offsetting the decline in equity holdings due to the profit taking by foreigners. In fact, the percentage of Samsung Electronics' treasury stocks was roughly halved to 7.1% from 13% after the company’s cancellation of treasury stocks on May 23.
Foreign investors are enjoying high earning rates by selling IT and semiconductor stocks whose price shot up thanks to strong business performances and net buying for airline, shipbuilding, steel, banking and insurance stocks during the period.