By Kim Tae-gyu
Staff Reporter
Overseas investors appear to be ending their long-standing love affair with POSCO, the world's fourth-largest steelmaker, which survived the global financial crisis.
According to the Korea Exchange (KRX), Monday, the value of POSCO equities held by foreign players reduced by about 3.4 trillion won from 27 trillion won at the end of last year to 23.6 trillion won by March 18 this year.
This marks the biggest negative change among the country's top 10 conglomerates, and contrasts to Hyundai Heavy Industries Group, which added up to 1.3 trillion won during the same time span.
Over the three-month period, the stock prices of POSCO dropped about 10 percent from 618,000 won per share as of the end of last year to move below the 550,000-won mark of late.
Domestic rival Hyundai Steel saw its stock prices rise from 86,500 last year to fluctuate in the vicinity of 88,000 won.
``POSCO share values are leading indicators for the markets. Although iron prices are not so bad right now, they appear to expect a downturn in months to come,'' Daishin Securities analyst Jason Mun said.
``Another downside is the uncertainty involving the procurement of resources such as iron ore or coal. Their prices are rising and the contact period has shortened to generate concerns for investors.''
Mun also noted the possible takeover of Daewoo International, the former subsidiary of the now defunct Daewoo Group.
POSCO participated in the auction for the country's largest general trading company alongside the Lotte Group and a consortium of financial outfits. The preferred bidder is expected to be decided in May or June.
``POSCO has shown a return on its equity ratio of around 20 percent except for last year when the global economy was hit hard by the financial distress. It is expected to rack up similar profitability this year,'' Mun said.
The Industrial Bank of Korea (IBK) Securities analyst Kim Yoon-sang partially agrees.
``Obviously, uncertainties regarding the resource procurement and their high prices have somewhat chilled investor sentiment. We need to keep a tab on POSCO's talks with coal and iron ore manufacturers,'' Kim said.
``Regarding the Daewoo International issue, the price of acquisition would be crucial if POSCO takes over the company.''
When contacted, POSCO said the disposal of company shares by foreign investors is not that big. It noted, ``Foreign share holdings reduced a mere 1.7 percentage points this year. That amount of fluctuation always happens.''