The price of Samsung Electronics shares has been continuously showing a bearish trend after a stock split. It dropped more than 12 percent in a month and a half. Market experts attribute this to the bearish mood in the stock markets of emerging countries and a selling spree among foreign investors prompted by concerns over performance in the second quarter. Short stock selling also showed a sharp rise after the price of Samsung Electronics shares decreased.
KOSPI market bellwether Samsung Electronics closed at 46,600 won (US$42.19) on June 18, down 2.2 percent from the previous trading day. The company saw its share prices fall for four trading days in a row.
In particular, the price of Samsung Electronics shares hasn’t recovered to the 50,000 won (US$45.27) level after it closed below 50,000 won (US$45.27) on June 8. The figure went down by 12.08 percent compared to 53,000 won (US$47.99) when Samsung Electronics resumed trading after the stock split. The price of Samsung Electronics preferred shares closed at 37,200 won (US$33.68) on the same day, down 12.47 percent over the same period.
Foreign investors’ selling spree is the main cause of the drop in share price. Foreigners sold 826.8 billion won (US$748.57 million) worth of Samsung Electronics shares this month alone. Samsung Electronics ranked first in terms of foreigners’ net sales on the KOSPI over the same period.
Foreign investors also showed the same trend last month. They net sold 34.1 billion won (US$30.87 million) worth of stocks before they turned into a net buyer after the block deal at the end of last month. Considering the fact that block deals adversely affect stock prices, it means that foreigners’ supply and demand are bringing down the stock prices.
Foreign investors went on a selling spree because of the bearish market in emerging countries and concerns over lower performance. In addition, the stronger dollar encouraged foreigners to sell their stocks in the domestic market, resulting in a lower price of Samsung Electronics shares.
Concerns over performance in the second quarter are another cause of the fall in stock prices. According to financial market research firm FnGuide, the consolidated operating profit of Samsung Electronics in the second quarter is expected to stand at 15.51 trillion won (US$14.04 billion), showing a slight dip from the previous quarter. The company is to see its operating profits drop for the first time in five quarters because of poor performance of the IT & Mobile Communications (IM) division caused by sluggish sales in smartphones. Concerns over semiconductor market conditions have been continuously raised as well.
As the price of Samsung Electronics shares decreased to one fiftieth, its short stock sale also skyrocketed. The percentage of trading values of Samsung Electronics’ short stock sale after the stock split surpassed 10 percent for seven trading days. Out of the seven, the figure exceeded 18 percent, the designation standards for overheated short stock sale, for two trading days. This stands in stark contrast to that the percentage of short stock sale trades never surpassed 10 percent in March and April this year before the stock split.