Lee Min-hyung joined The Korea Times in 2014 and has worked as a journalist mainly in Korea’s finance, tech and automotive industry. He specializes in content creation, breaking news and in-depth analysis currently on transportation and mobility. You can reach him via mhlee@koreatimes.co.kr.
Will shares of Hyundai, Kia continue reeling amid heightened Trump risk?
The headquarters of Hyundai Motor and Kia in Seoul / Courtesy of Hyundai Motor Group
By Lee Min-hyung
Record earnings projection will offset lukewarm stock momentum
Shares of Hyundai Motor and Kia took a serious beating in July as heightened external political risks —posed by the potential reelection of former U.S. President Donald Trump — continue to chill investor sentiment toward the two Korean carmakers, according to data and analysts, Monday.
The United States is one of the most important export markets for the two carmakers. But after incumbent U.S. President Joe Biden dropped out of the presidential race on Sunday, the Republican candidate appears to have a better chance of winning the upcoming election.
As Trump has outwardly expressed pessimism over electric vehicles (EV) and eco-friendly cars, Hyundai Motor and Kia are increasingly alarmed by the external political upheaval. The two affiliates of Hyundai Motor Group came in second in terms of sales of eco-friendly vehicles, such as EVs and hybrid cars, in the world's largest economy last year, following Tesla.
This concern is reflected in the two firms' falling stock values. According to data from the Korea Exchange, Hyundai Motor hit a high of 299,500 won ($215.61) per share on June 28 but has since lost momentum for an additional rally. The stock price of the nation's leading carmaker closed at 255,000 won per share on Monday, down 14.85 percent from the previous high last month.
Kia shares have also displayed a similar trajectory over the past month. Shares of the carmaker reached a high of 135,000 won per share on June 19, but they plunged to close at 115,900 won per share on Monday.
Former U.S. President Donald Trump speaks at a campaign rally in Grand Rapids, Michigan, Saturday. AP-Yonhap
Analysts, however, said the two carmakers will be able to overcome the short-term stock fluctuation with strong earnings.
"The upcoming U.S. presidential election still comes as a major uncertainty, but the carmakers will be able to achieve solid earnings in the latter half by widening global sales for profitable vehicles and responding swiftly to any changes in the market for eco-friendly vehicles," Hanwha Investment & Securities analyst Kim Sung-rae said.
Utilizing the key advantages, Hyundai Motor Group will be able to achieve record earnings in the second quarter, as the firm's agile response to growing market demand for hybrid SUVs will help increase its sales and profitability in the quarter as well, according to the analyst.
Other brokerage houses also painted a rosy outlook for the carmakers' medium- to long-term stock movements, citing their robust earnings projections.
Hyundai Motor is forecast to report an operating profit of around 4.3 trillion won in the second quarter, up 2 percent from the previous year, according to data from DS Investment & Securities, which raised the target price on Hyundai Motor to 340,000 per share from 300,000 won.
"Investors need to pay attention to the carmaker's stock growth momentum in the latter half," Choi Tae-yong, an analyst at the securities firm, said.
"They include events, such as the planned operation of the group's new manufacturing facility in (the U.S. state of) Georgia in October, and its upcoming initial public offering in India, scheduled for September."