Affected by External Variables
As the South Korean stock market shows a greater variability this year in the aftermath of the United States raising interest rates and the trade war between the U,S, and China, there has been keen competition to take the top spots in market capitalization.
According to data from local market tracker FnGuide on Aug. 29, 17 of the top 20 on the main KOSPI bourse in terms of market capitalization based on closing prices a day ago saw their rankings change compared to earlier this year. The three companies whose rankings remained unchanged were Samsung Electronics, which ranked top, SK Hynix Inc., which took second place, and Shinhan Financial Group, which is No. 13.
In particular, Samsung Group’s listed subsidiaries suffered the biggest upheaval. The market capitalization of Samsung SDI Co. amounted to 15.82 trillion won (US$14.23 billion), up 8.5 percent from the beginning of the year. Accordingly, the company’s ranking climbed up six notches from 26th to 20th, showing the biggest jump.
In addition, the ranking of Samsung BioLogics Co. rose from 8th to 4th, while that of Samsung SDS Co. and Samsung C&T Corp. went up from 24th to 19th and from 12th to 9th, respectively. On the other hand, the market capitalization of Samsung Life Insurance Co. came to 18.5 trillion won (US$16.64 billion), down 24.5 percent from the beginning of the year, and its ranking dropped seven places down from 10th to 17th as well. This is because there are greater uncertainties about Samsung Group’s governance reform due to change of political power and growing risks from lower profitability and change of accounting standards.
The ranking of LG Electronics Co. dropped from 19th to 29th, while that of Netmarble Corp. fell from 20th to 32nd. The decline of two companies’ stock prices was so steep that they failed to make the list. Particularly, the market capitalization of LG Electronics stood at 12.06 trillion won (US$10.85 billion), showing a sharp drop of 32.7 percent from 17.92 trillion won (US$16.12 billion) earlier this year. The price of LG Electronics shares continued to fall after hitting a 52-week high of 114,500 won (US$103.01) on March 22. It reached a 52-week low of 70,800 won (US$63.70) on Aug. 21. This was largely due to a loss of the MC division which is in charge of smartphone business. LG Electronics’ MC business division posted 185.4 billion won (US$166.8 million) in an operating loss in the second quarter this year, recording a loss for 13 quarters in a row. The problem is that it needed more time for its MC business division to turn into profit-making as the smartphone market had a dim outlook this year. The premium market is expected to become more competitive owing to the sluggish growth of the smartphone market and the release of competitive products.
The market capitalization ranking of Hyundai Motor Co. fell from 3rd to 6th because of the drop in its stock price caused by unfavorable market conditions, while that of Naver Corp. and KB Financial Group dropped from 5th to 8th and from 7th to 11th.
Korea Electric Power Corp. (KEPCO) saw its ranking fall from 11th to 14th, LG Chem Ltd. from 6th to 7th, SK Innovation Co. from 16th to 18th and POSCO Inc. from 4th to 5th. In contrast, the ranking of SK Telecom Co. rose from 14th to 12th, while that of LG Household & Health Care Ltd. rose from 17th to 15th, moving up two spots each.
Meanwhile, Celltrion Inc. ranked third with 33.73 trillion won (US$30.35 billion) after being delisted on the KOSDAQ and transferred to the KOSPI, surpassing Samsung BioLogics with 29.74 trillion won (US$26.76 billion).