Hyundai Heavy, Shinhan Worst Blue Chips
Other Big Underperformers Include LG Display, Shinsegae, POSCO
By Kim Tae-gyu
Staff Reporter
Blue chips on the Seoul bourse outperformed the market. But some of them struggled at rock bottom in the midst of the credit crunch and the resultant financial crisis.
According to the Korea Exchange Friday, the share price of the top 15 companies here, in terms of market capitalization, went down by 27.4 percent this year on average, higher than 37.7 percent for the mean of the main bourse.
Yet four companies underachieved the market, including Hyundai Heavy Industries (-53.5 percent), LG Display (-52.5 percent), Shinhan Financial Group (-40.7 percent) and LG Corp. (-37.9 percent).
Hyundai Heavy is the country's biggest shipbuilder; LG Display is the world's runner-up player in the liquid crystal display business; Shinhan is Korea's No. 2 financial group; and LG Corp. is a holding company of LG Group.
Hyundai Motor, the country's foremost automaker, barely escaped being beaten by the market. But it still chalked up a 36.7 percent loss in 2008.
``Hyundai Heavy lost most among blue chips because the global shipyard business suffered a free fall and LG Display was also hit hard by dwindling demand for flat panels,'' Goodmorning Shinhan Securities analyst Kim Joong-hyun said.
``Shinhan is a victim of the credit crunch, which chokes financial outfits while LG Corp. was dented because of its underachieving units such as LG Display,'' he said.
In comparison, defensive shares that are less vulnerable to the economic downturn have shone, such as tobacco industries and telecom operators.
KT&G, the country's top tobacco maker accounting for up to two thirds of the market, saw its share prices rise 6.7 percent in 2009. It was the sole outfit among the 15 blue chips to achieve the feat.
In general, makers of indispensable goods such as food, tobacco and utilities are categorized as defensive, or "counter-cyclical" shares.
Friday Market
The top 15 blue chips slumped Friday by averaging a 0.1 percent drop even while the benchmark KOSPI gained. The junior Kosdaq and the foreign exchange rate also rose.
The KOSPI extended its winning streak to five sessions by adding 5.06 points, or 0.43 percent, to close at 1,180.97. The tech-loaded Kosdaq crept up 2.15, or 0.63 percent, to 342.45.
The domestic currency inched up against the greenback as the won finished at 1,290 won per dollar, up 2 won from the previous close.
The KOSPI started on a strong note despite an overnight fall in the United States, which shows so-called de-coupling between the Seoul bourse and Wall Street.
The 30-share Dow Jones Industrial Average dumped 2.49 percent Thursday. The tech-filled Nasdaq also tumbled 1.71 percent as bears outnumbered bulls due to dismal economic outlooks.
In particular, the news that the price of semiconductors has recovered boosted investors' sentiments, for Korea is home to the world's top two memory chipmakers ― Samsung Electronics and Hynix Semiconductor.
Getting off to a solid start, the share market experienced ups and downs throughout the day before ending around Thursday's close in positive territory.
``Over the last three weeks, the KOSPI rocketed up to 30 percent. Despite some bearish prospects, things would be good by year-end,'' Woori Securities analyst Lawrence Kim said.
``However, it is not certain whether or not the share prices will continue to rise next year. I am pessimistic about that. When firms announce their 2008 results early next year, investors will be disappointed, thus dragging down share prices'' he said.
Three of the four underachieving blue chips lost Friday. They were headed by Hyundai Heavy, which shed 0.96 percent down to 206,000 won. Shinhan lost 1.09 percent to 31,750 won and LG Corp. edged down 0.12 percent to 45,300 won.
Only LG Display, among the four-member fraternity, rose slightly by 0.21 percent to 23,500 won.
The increased chip prices helped foremost manufacturer Samsung Electronics jump 4.59 percent to 489, 500 won. They also helped No. 2 Hynix jump by 4.8 percent to 8,520 won.
Steel makers lost ground after POSCO announced its first cut in production due to diminishing demand and an economic slump. It trimmed by 1.15 percent to 388,800 won.
A total of 677.14 million shares worth 5.31 trillion won changed hands. But losers outnumbered winners 438 to 385 with a single share reaching a daily downward limit of 15 percent.