Investors in Hyundai are bailing outHyundai Motor Group made the first payment yesterday on the Korea Electric Power Corp.’s plot in the heart of Gangnam District, southern Seoul, that it won in an auction last week.
But the grand ambitions of Chairman Chung Mong-koo may suffer from an exodus of investors. In six trading days, they have dumped enough stock to reduce the combined value of the group’s shares by more than the massive amount it paid for Kepco’s land.
Yesterday, Hyundai Motor paid 10 percent, or 1.55 trillion won ($1.4 billion), of the 10.55 trillion won purchase price it offered for the state-run power company’s 79,342-square-meter (19-acre) property in Samseong-dong, Gangnam. The automaker will be paying off the rest over the course of a year.
Kepco will be relocating to a new headquarters in Naju, South Jeolla, in November.
Although the automaker continues to celebrate its purchase, the massive bid isn’t sitting well with investors or the automaker’s labor union as the price was three times the assessed value of the property, which was 3 trillion won. It was more than double the next highest bid by its chief competitor, Samsung Group.
The stock value of Hyundai Motor, as well as the affiliates that participated in the bid in a consortium, has been declining. They include Kia Motors, the automaker’s main affiliate, and Hyundai Mobis, an auto parts maker.
Analysts estimate that the automotive group has lost roughly 11 trillion won so far in market capitalization.
Hyundai Motor’s stock has been on a downward spiral. The stock has fallen nearly 6 percent since the group won the auction on Sept. 18.
Yesterday, the automaker’s stock retreated to close at 187,000 won, down 1.32 percent from the previous day.
The situation isn’t much different for Kia Motors, whose stock has fallen 2.5 percent. Hyundai Mobis has fared better as its stock has been inching up in the last three trading days. But since it dropped nearly 8 percent on Sept. 18, it’s still lower than before the sale.
“I bought Hyundai Motor stock the day before Kepco made the announcement because it was obvious Hyundai would come out on top,” said an investor. “But I didn’t know it would bid at such a ridiculous level.”
Hyundai Motor’s union is mulling whether to continue labor outages next week over wages. The union has been arguing that while the company has an astronomical amount of money to buy property, it’s denying its workers higher wages.
BY LEE HO-JEONG [firstname.lastname@example.org]
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