Apple Effect
The share price of Samsung Electronics recorded the largest gain in six months thanks to the news that a foreign securities company adjusted its forecast for Apple for the worse. The policy such as treasury stock purchase and expanded dividends, which are anticipated by foreign investors buying its shares these days, are expected to have the largest influence on the share price of Samsung Electronics down the road.
On February 21, Samsung Electronics gained 3.42%, or 44,000 won (US$40.96), to close at 1.33 million won (US$1236) in the Korean stock market. Its preferred share closed at 1.024 million won (US$953) as well, recording a 5.79% increase from a session earlier. The latter posted a rise of over 5.0% for the first time since August 13.
Barclays Capital Securities published a report on that day to lower its investment opinion for Apple from expansion to neutral in 10 years. It added in the report that Samsung Electronics’ share in the global smartphone market increased.
According to market research firm Gartner’s data quoted in the report, Apple accounted for 24% of the global smartphone market in the last quarter of 2011, leading Samsung by a margin of one percentage point, but Samsung and Apple recorded a share of 29% and 18% in the fourth quarter of last year, respectively. Apple’s share price fell over 1% on the previous day due to the report.
Another positive factor for Samsung is the increasing possibility of treasury stock purchase, although nothing has been mentioned by the company itself about the matter. Many industry insiders are thinking that the price will not fall below 1.3 million won (US$1,209) in the near future.
“With the price of Samsung Electronics having been adjusted a lot nowadays, investors both at home and abroad are betting on treasury share purchases, even though the manufacturer has made no official announcement about it,” said Oh Sang-woo, researcher at Leading Investment & Securities, adding, “The price is likely to hit the 1.4 million won mark before the end of the second quarter, once the Galaxy S5 is released sooner or later to improve its sales performance.”
These days, foreign investors are increasing their purchase of Samsung Electronics shares. According to the Korea Exchange, they bought 197.8 billion won (US$184.2 million) worth of shares of Samsung on February 21, which is the largest sum since the 207.7 billion won (US$193.3 million) of September 12, 2013. They continued a net by for four days in a row while purchasing 12.5 billion won (US$11.6 million) worth of the preferred shares.
At the same time, institutional investors are calling for Samsung Electronics to shore up its shareholder return policy. “I heard from Samsung Electronics that it is subject to increasing calls from foreign investors for treasury share purchase and increased dividends,” said a local fund manager, continuing, “It seems that they are buying the shares based on the return policy rather than the possibility of a sizable momentum.”