Stocks drop, and rise, after export restrictions

Japan’s export restrictions are no doubt causing serious economic trouble, but in the stock market, there are both winners and losers.

One company lost several hundred billion won in capitalization since Japan announced it moves, while the share price of another jumped 40 percent.

To better understand the full impact of the export restrictions on companies, the JoongAng Ilbo’s data journalism team analyzed information from the Ministry of Trade, Industry and Energy stock prices and figures on Japanese investment in Korea.

A total of 73 Korean companies with Japanese equity investment are listed on the Korea Exchange. According to Wise Report, a provider of corporate information, 15 of them have Japanese companies as their largest shareholders.

Lotte Corporation is 2.49 percent owned by Lotte Holdings, a Japanese company.

Since Japan announced its plans to restrict exports of key materials used in the manufacture of semiconductors, displays and smartphones, the stock prices of most of those companies have dropped.

Lotte Corporation’s market capitalization stood at 4.63 trillion won ($3.9 billion) on July 1 and fell to 4.23 trillion won by Monday, meaning that 608.5 billion won of value has vanished.

Among listed companies with Japanese shareholders, only the share prices of Tokai Carbon Korea, S-1 Corporation and Moatech were up on Monday compared to July 1.

The share prices of GMB Korea, SDC, Lotte Corporation and Unison fell by 14.35 percent, 13.18 percent, 13.14 percent and 12.9 percent respectively as of Monday.

Some Korean companies benefited from the Japanese trade moves.

Makers and developers of Multi Layer Ceramic Capacitors (MLCC) have done particularly well. MLCCs are key components in electronic products, and Japan has nearly 60 percent of the market.

Fears of Japan stopping shipments of the products to Korea boosted the stock prices of Samwha Electric, a developer and producer of MLCC, by 19.39 percent through Monday.

The stock price of Soulbrain, which produces hydrogen fluoride, also known as etching gas, was up as much as 40 percent during the period in question. Hydrogen fluoride is a material on the export-restriction list.

Japan has invested 52 trillion won in Korea, making it the second-biggest investor in the country. Japan’s share of total foreign investment is 13 percent.

Japan is also the second-biggest “direct investor” in Korea.

Under Korean law, direct investment is defined as when 100 million won in capital is committed and 10 percent of a company is owned (loans of more than five years also count).

According to Trade Ministry data, 18,725 Korean companies had foreign direct investment as of the end of 2018. China was the top, with 3,205 companies, followed by Japan, with 3,170. The United States ranked third, with 2,211. Japan’s share was 16.9 percent.

By industry, 944 wholesale or retail companies had Japanese direct investment. They either import Japanese products to Korea or export Korean products to Japan. Korean sales units of Toyota, Sony and Hitachi are among them. Machinery followed, with 330 companies, and then electric and electronic engineering, at 289.

Japanese-connected companies with stock traded in Korea enjoyed a rebound between July 2 and July 4 but plunged by an average of 3.31 percent on July 8. They rebounded on July 15 but went down by around 1 percent on July 18.

As of July 22, their shares were down by an average of 4.39 percent from July 1. That is more than the average drop of the Korean stock market of 1.76 percent.

BY KIM WON [ebusiness@joongang.co.kr]