Samsung shares are on a roller coaster

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Samsung shares are on a roller coaster

Samsung Electronics’ headquarters in Seocho District, southern Seoul. [NEWS1]

Samsung Electronics’ headquarters in Seocho District, southern Seoul. [NEWS1]

Samsung Electronics shares closed below 80,000 won ($70.7) for the first time in more than four months Thursday, mainly due to dumping by foreign investors. 
 
Shares closed at 78,500 won on Thursday, down 1.88 percent from the previous session. It was the first time Samsung shares closed below the 80,000 won mark since Dec. 29, when they closed at 78,300 won.
 
Compared to Jan. 11, when Samsung shares closed at an all-time high of 91,000 won, they were down 13.7 percent.  
 
Foreign investors offloaded 770.5 billion won worth while institutions sold 32.2 billion won worth. Retail investors purchased 789.7 billion won worth of shares.
 
Samsung Electronics was one of the most popular picks for local punters since it led a bullish rally last year. 
 
Shares rose as high as 96,800 won during intraday trading on Jan. 11. Some predicted they would break the 100,000 won mark at the time.
 
But then they sagged and haven’t been above 90,000 won since Jan. 12.
 
Retail investors were hit hardest. Individual investors owned 605 million common shares of the company as of April 30, 10.13 percent of the total, according to data from the Korea Securities Depository. It was the first time retail ownership broke 10 percent for Samsung Electronics. The number of individual share owners is estimated to be about 5 million.
 
Retail investors bought a net 21.19 trillion won worth of Samsung Electronics shares between Jan. 1 to May 12, according to Korea Exchange. During the same period, foreigners offloaded 9.11 trillion won worth of shares while institutions sold 12.54 trillion won.
 
“I bought Samsung Electronics shares at 90,000 won, should I sell them off now?” read a recent post in an online community for retail investors.
 
Analysts say there are a few complex reasons behind the continuous price decline, including concerns over inflation, establishment of the Semiconductors in America Coalition (SIAC), and a shrinking Taiex index in Taiwan.
 
On Tuesday, U.S. semiconductor companies and big businesses that use chips announced the formation of the coalition to push for financial support by Washington for semiconductor research and manufacturing. Its members include chip makers Intel, Nvidia and Qualcomm and companies that rely on semiconductors, like Apple, Google, Microsoft, Amazon Web Services, AT&T and Verizon.
 
“The coalition has asked for the U.S. Congress for $50 billion in funds,” said Lee Kyung-min, an analyst at Daishin Securities. “If the U.S. governments decides to support the semiconductor industry, it’s inevitable for Korean and Taiwan companies to lose market share [in the U.S.]”
 
The shrinking Taiex index in Taiwan also is a factor.
 
The Taiex closed at 15,670.1 on Thursday, down 1.46 percent from the previous session. Samsung's rival Semiconductor Manufacturing Company (TSMC) declined 2.32 percent on the same day. The semiconductor company's April sales decreased 13.8 percent compared to March. 
 
“Due to a weaker-than-expected performance by TSMC in April and increasing Covid-19 infections in Taiwan, some are raising concerns over a possible production shortfall in smartphone factories located in Taiwan,” said Lee Won-sik, an analyst at Korea Investment & Securities. “Retail investors’ confidence in tech companies has been weakened.”
 
Market analysts have mixed forecasts for Samsung Electronics shares.
 
Doh Hyun-woo, an analyst at NH Investment & Securities, predicts that “prices are not expected to increase for the meanwhile.” Samsung falls behind TSMC in the non-memory business and even other rivals like U.S.’s Micron in memory semiconductor sector, Doh said. 
 
Analyst Lee, however, disagrees with Doh. 
 
“Considering all factors including the company's performance, we see 78,000 won as the lowest point of its price,” said Lee. “Now is the good time to purchase Samsung Electronics shares.”
 
BY CHEA SARAH, HWANG EUI-YOUNG   [chea.sarah@joongang.co.kr]
 
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