Analysts said that divvying up the face value of Samsung Electronics’ shares can increase the trade volume of the entire Korean stock market. This is because Samsung Electronics’ total capitalization makes up 20 percent of Korea’s entire stock market.
According to a report published by Shinhan Investment Corp. on December 24, “The price of one Samsung share used to be equal to one month’s rent for a studio apartment ten years ago, but it has risen to an amount roughly equal to one month’s average household expenditure.” The report added, “A study on correlation between Samsung’s share price and the market’s monthly net transaction amount for the last ten years shows that an increase in Samsung shares leads to a decrease in the market’s overall trade volume.”
According to Shinhan Investment Corp., when Samsung’s shares were hovering at 200,000 won (US$189) per share, Samsung’s monthly annual transaction amount was over 5 trillion won (US$4.7 billion), but as the share price went up to 400,000 won (US$378), the monthly transaction amount dropped to 2 trillion won (US$1.9 billion). The correlation between Samsung’s share price and its net monthly transaction amount is over 0.7.
The closing price of Samsung Electronics on December 24 was 1.4 million won (US$1,321), and the aggregate market value was 208.4 trillion won (US$196.7 billion), roughly 16.05 percent of Korea’s stock market. If preferred stocks were taken into account, the aggregate value would increase by 23.77 trillion won (US$22.4 billion), which is 17.88 percent of whole market. The relationship between Samsung and the Korean stock market is reciprocal; when the price of Samsung shares increase, Samsung’s mammoth market share balloons, its trade volume dips, and that of the Korean market as a whole does as well.