Korean Market Vulnerability
Samsung Electronics is moving sideways in the Korean stock market, failing to get to the long-cherished two million won mark, whereas Apple is continuing its upward movement. Under the circumstances, Apple’s earnings announcement scheduled for January 27 (local time) is drawing the attention of investors.
They are riveting their eyes on the regular Federal Open Market Committee (FOMC) meeting, which takes place between January 28 and 29. If the Fed opts to expand its tapering of the quantitative easing program there, more investors could get out of the Korean stock market, giving it a jolt.
The stock price of Samsung Electronics has been on a downward spiral since January 7, when it released its tentative earnings for the last quarter of 2013. It is currently moving around 1.3 million won.
Market participants are concerned over the possibility of the manufacturing giant’s low growth. Stock information provider FnGuide has recently adjusted its 2014 operating profit estimate for Samsung from 41 trillion won (US$37.8 billion) to 38.9 trillion won (US$35.9 billion). The estimated net profit was lowered from 33.59 trillion won (US$31.0 billion) to 32 trillion won (US$29.5 billion), too.
In the meantime, investors are paying great attention to Apple’s figures. If the company comes up with better-than-expected results, the shock will be beyond anyone’s imagination. This is because its arch-rival, Samsung Electronics, accounts for approximately 20% of the market capitalization in the Korean market.
“It is likely that Apple, unlike Samsung Electronics, will bring out higher-than-expected results for Q4 last year,” said Hi Investment & Securities research analyst Song Eun-jeong, adding, “Its sales are estimated at US$58.4 billion, gross profit on sales at US$21.9 billion, and gross-margin ratio at 37.5%.”
The problem is that things are growing more and more adverse for Samsung Electronics with Apple and Chinese handset manufacturers posing a greater threat to it. Apple signed a sales contract with China Mobile last month to sell iPhones in China. China Mobile has more than 700 million subscribers in its home turf.