Conglomerates’ market cap rises

So far this year, the total market capitalization of the top 10 conglomerates and their affiliates traded on the benchmark Kospi have increased 5.4 percent, or 36 trillion won ($31.55 billion) more, to 714.3 trillion won compared to the end of last year.

Data from the Korea Exchange, the sole operator of the Korean stock markets, showed that the market capitalization of the conglomerates accounts for 55.2 percent of all stock investment made on the primary market, which is a 0.7 percentage point increase compared to the end of last year.

The figure did not include public companies traded on the stock market.

“[The increase of top 10 conglomerates’ market capitalization] was largely contributed by the improvement of the stock prices of leading companies including Samsung Electronics, Posco and Hyundai Heavy Industries,” said a KRX official.

Not all of the conglomerates saw their market capitalization increase. The combined market capitalization of 18 LG Group affiliates, including LG Electronics, saw its market capitalization shrink 11.8 percent as of Oct. 12 compared to the end of last year to 73.2 trillion won. The seven Hanjin affiliates, including Korean Air, saw their combined market capitalization drop 8.6 percent during the same period to 4.2 trillion won while Hyundai Motor Group, which ranks second after Samsung Group by market capitalization, fell 2 percent to 104.6 trillion won from the end of last year.

Among the top conglomerates, Hyundai Heavy Industries saw the biggest increase in its market capitalization, which surged 57.3 percent since the end of last year to 13.2 trillion won.

The shipbuilder’s stock value skyrocketed 73.7 percent from 87,800 won to 152,500 won during the same period while the share value of its affiliate Hyundai Mipo Dockyard increased 51.8 percent to 79,100 won.

Posco had the second-highest year-on-year increase of market capitalization, growing 37.5 percent during the same period. SK trailed with 14.3 percent. Even the troubled Lotte Group, whose founding family is under investigation by the prosecutors’ office, has seen its market capitalization increase 3.1 percent so far this year.

Samsung Group retained its top spot among the leading conglomerates with a market capitalization of 352.2 trillion won, which grew 7.7 percent compared to the previous year even though its flagship Samsung Electronics struggles with problems surrounding its Galaxy Note7 smartphone.

When breaking down to individual stocks, Hanwha Group’s defense contractor Hanwha Techwin saw its share value surge the highest, at 84.8 percent, followed by Hyundai Heavy Industries. Samsung Card came in third with 64.7 percent.

Hanwha Techwin is a former affiliate of Samsung Group that merged with Hanwha Group last year.

The defense contractor’s share value has risen since the beginning of the year thanks largely to improvement in its performance and the effect of the Korean government’s setup of the U.S. Terminal High Altitude Area Defense (Thaad).

“Hanwha Techwin in the third quarter is expected to achieve 926.5 billion won in revenue, which is up 43 percent from a year ago, and a 54.3 billion won operating profit, up 124 percent,” said Noh Hyun-ju, an analyst with Heungkuk Securities. “The companies’ profit is expected to improve with the increased export of the self-propelled howitzer K9 Thunder.”

The Korean defense contractor is currently negotiating deals with India worth 400 billion won and with Poland worth 250 billion won.

Unlike Hanwha Techwin, Hanwha Group affiliate Hanwha Galleria Time World saw the sharpest decline in its share value. Since the end of last year the duty-free affiliate saw its share value plummet 57.6 percent as Hanjin shares tumbled 36.6 percent and Samsung SDS’s fell 36 percent.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]