Institutional investors dump Samsung shares amid macroeconomic uncertainty

A Samsung flag flutters in breeze in front of the firm's office building in Seoul. Yonhap

By Lee Min-hyung

Institutional investors are engaging in a selling spree of Samsung Electronics shares on protracted fears of an economic recession here and abroad.

Samsung shares hit a 22-month low of 55,900 won ($43.13) at one time on Friday. The Samsung fall also dragged down the KOSPI. The main bourse narrowly defended the 2,300-point mark, closing at 2,305.42, down 1.17 percent or 27.22 points. Samsung shares finished at 56,200 won, down 1.4 percent from a day earlier.

Market analysts attributed the worsening sentiment to falling DRAM prices and reduced demand for IT devices sparked by multiple overseas risk factors, such as the global economic slowdown and the lockdowns in China's commercial hub of Shanghai.

"Shipments of IT devices and smartphones suffered a big slump during the second quarter due to deteriorating global demand caused by the economic slowdown and the aftermath of the lockdowns in China," Hi Investment & Securities analyst Song Myung-sup said. "If the lockdown measure is lifted, the production and shipment of the devices will increase and demand is also expected to grow."

The global economic uncertainty has put a damper on stock markets here and abroad. The U.S. Fed's repeatedly hawkish message keeps heightening fears of stagflation.

Reflecting the growing fears, institutional investors have continued their selling spree of Samsung shares for four consecutive trading days since June 27. On Thursday, retail investors purchased Samsung shares worth 40 billion won, but foreign and institutional investors sold the largest-cap stock here in the amounts of 9.8 billion and 30 billion won, respectively.

NH Investment & Securities analyst Do Hyun-woo expected the imbalance between memory chip supply and demand to continue until early 2023 due to multiple external risk factors.

"The memory supply and demand imbalance was earlier forecast to start recovering sometime in the latter half of this year, but risk factors, such as global rate hikes, the ongoing war between Russia and Ukraine and the lockdowns in China, will delay the timeline to early 2023," he said.

Despite the setback, securities firms expected Samsung to achieve a rebound in its earnings in the second quarter.

"Samsung's operating profit is estimated to reach 14.5 trillion won between April and June, up more than 15 percent from the previous year," Seo Seung-yeon, an analyst at Shinyoung Securities, said. "The firm's current stock price reflects macroeconomic uncertainties, but its shares may gain positive momentum for recovery as the year-end approaches."

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