Semiconductor Market Picking up
Samsung Electronics’ share price is about to surpass 50,000 won (US$42.07) for the first time in a year and four months. It has continued to rise for days on expectations for an improved performance in the third quarter.
The company’s shares closed at 49,200 won (US$41.40) on the benchmark KOSPI market on Sept. 20, up 0.10 percent from the previous trading day, according to the Korea Exchange (KRX) on Sept. 22. The figure increased 11.82 percent for the first time in 20 days after it closed at 44,000 won (US$37.02) at the end of last month. In particular, Samsung Electronics’ share price had hit a 52-week high for the third consecutive days from Sept. 18 to 20.
After Samsung Electronics carried out a 50:1 stock split in May last year, its stock price has fluctuated mainly between 44,000 won (US$37.02) to 49,000 won (US$41.23). The figure once fell below 40,000 won (US$33.66) earlier this year.
The rally in Samsung Electronics’ stock price has been led by foreign and institutional investors. Foreigners net sold 1.19 trillion won (US$1 billion) worth of Samsung Electronics’ shares in August, but they net bought 354.70 billion won (US$298.44 million) in September. Institutions also bought up 487.70 billion won (US$410.35 million) worth of the company’s stocks over the same period.
Experts attributed the buying trend to market expectations for a recovery in semiconductor market conditions. Lee Soon-hak, an analyst at Hanwha Investment & Securities Co., said, “Amid growing uncertainly due to the trade dispute between the United States and China, it is very positive that the semiconductor market is picking up. It will not be long that memory chip prices stop falling.”
There is also growing expectations from the launch of Samsung Electronics’ new foldable smartphone “Galaxy Fold.” Do Hyun-woo, an analyst at NH Investment & Securities Co., said, “The Galaxy Fold has all been sold out in pre-order sales in South Korea and abroad. Foldable smartphones will gain growth momentum starting from next year.”
However, some said it is too early to expect a full-scale improvement in Samsung Electronics’ performance in the third quarter.
Securities companies’ average consensus of Samsung Electronics’ operating profit for the third quarter came to 6.99 trillion won (US$5.88 billion) as of Sept. 19, according to market research firm FnGuide. The figure represents a 60.21 percent drop from 17.57 trillion won (US$17.79 billion) in the third quarter last year when the quarterly operating profit reached a record high. It also slid 9.98 percent from 7.77 trillion won (US$6.54 billion) forecast three months earlier.
Kim Hyung-ryul, the head of the research center at Kyobo Securities Co., said, “It is positive that Samsung Electronics’ earnings are improving compared to the first half, but they are still sluggish compared to last year. It will take more time for the company to see its earnings return to its prime level.”