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Entrance to SK Hynix’s Cheongju Plant 3. (Photo=SK Hynix) |
[Alpha Biz= Paul Lee] Foreign investors are continuing to offload their holdings in Samsung Electronics, South Korea’s flagship stock, despite its low valuation and the weakening Korean won. This selling pressure follows last year’s large sell-off, with foreigners having already sold over 1.7 trillion won ($1.3 billion) worth of Samsung Electronics shares this year.
According to the Korea Exchange on Friday, foreign investors sold 1.76 trillion won worth of Samsung Electronics shares from the beginning of the year through February 13. They were net buyers of Samsung Electronics on only ten trading days during this period.
In contrast, foreign investors net sold 1.31 trillion won worth of stocks in the broader KOSPI market during the same period, indicating that they reduced their holdings in Samsung Electronics while increasing their positions in other stocks. Notably, they purchased 1.9 trillion won worth of SK Hynix shares.
Due to the continued sell-off, foreign ownership of Samsung Electronics shares fell to 49.87% on February 3, the first time it dropped below 50% in over two years since January 11, 2023. This is a significant decline from the peak of 56.55% in July 2023.
Despite Samsung Electronics’ stock price hovering in the 50,000 won range and its price-to-book ratio (PBR) sitting at just 1.01, along with a favorable exchange rate exceeding 1,400 won per dollar, foreign investors continue to reduce their holdings.
Samsung Electronics shares, which peaked at 88,800 won in July last year, have struggled to recover, remaining stuck in the “5-man-electronics” (50,000 won level) range. The key reason behind this foreign exodus is growing concerns over Samsung’s eroding dominance in the global semiconductor industry.
Samsung Electronics, once a leader in memory chip technology, has faced increasing competition. It is trailing SK Hynix in high-bandwidth memory (HBM) development and is under pressure from Chinese competitors. Moreover, Samsung’s fifth-generation HBM reportedly failed to pass Nvidia’s quality tests, raising doubts about its competitiveness in the AI-driven semiconductor boom.
In Q4 2023, Samsung reported an operating profit of 6.49 trillion won, falling short of market expectations. Its semiconductor division posted an operating profit of 2.9 trillion won, lagging behind SK Hynix’s 8.08 trillion won.
However, analysts remain optimistic about Samsung Electronics’ recovery. With legal uncertainties surrounding Chairman Lee Jae-yong now cleared and the demand for AI-related semiconductors rising, Samsung is accelerating its HBM development. The company is also conducting a 10 trillion won share buyback, which could support the stock price.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
