Warning on Semiconductors
Samsung Electronics Co. shares fell more than 5 percent due to “Morgan Stanley shock.” The main Korea Composite Stock Price Index (KOSPI) closed above 2,500 for the first time in a month. As Morgan Stanley expressed concerns again that a boom in memory chips is likely to peak soon, investors sold their Samsung shares for profit making.
Samsung Electronics shares closed at 2,632,000 won (US$2,415.79) on November 27, down 5.08 percent from the previous day. After its shares dropped 140,000 won (US$128.50) in just one day, 18 trillion won (US$16.52 billion) worth of the company’s market cap disappeared. Samsung Electronics saw its shares show the biggest drop of over 5 percent after the company permanently halted global sales and production of the Galaxy Note 7 on October 11 last year. On the 27th, foreign investors net sold 452.1 billion won (US$414.96 million) worth of stocks on the KOSPI market and 330 billion won (US$302.89 million) of them were Samsung Electronics stocks alone.
Market experts say a research report issued by Morgan Stanley dragged down Samsung Electronics shares. The report titled “Thanks for the Memory, Time For a Pause” had a negative outlook on the market conditions of the memory semiconductor sector which is the main business of Samsung Electronics. It downgraded its view of Samsung to “equal weight” from “overweight” and lowered its price target on the stock from 2.9 million won (US$2,661.88) to 2.8 million won (US$2,569.99). Morgan Stanley analyst Shawn Kim said, “The boom in memory chips such as DRAM, NAND and OLED is likely to peak soon due to increasing supply. When earnings in the memory segment shoot up next year, its stock prices can temporarily go down.”
An increasing number of market experts show concerns over the peak in the semiconductor industry, which is rising with the super cycle boom. More and more of them also say that the downturn in the semiconductor industry will come faster than expected.