Anna Jiwon Park has been covering the politics at The Korea Times since the summer of 2024, when she joined the press pool for the Office of the President in Korea. Prior to that, she spent about five years reporting extensively on financial markets, regulatory authorities and the financial industry. She joined The Korea Times in 2019 after spending eight years as a broadcast journalist at Arirang TV, Korea’s leading global broadcaster, covering politics, defense and culture.
How will Samsung affiliates' stock prices move?
Samsung Electronics' Seocho Office Building located in southern Seoul / Yonhap
By Anna J. Park
Samsung C&T expected to enjoy biggest stock price rise amid market expectations over increased dividend rates
By Anna J. Park
As late Samsung Chairman Lee Kun-hee ― formerly the richest person in Korea in terms of stock ownership ― left behind 18.2 trillion won ($16.1 billion) worth of shares in various Samsung affiliates, the market's attention is focused on what will happen to stock prices of the global conglomerate's affiliates.
The deceased chairman owned 4.18 percent of Samsung Electronics shares, 20.76 percent of Samsung Life, 2.88 percent of Samsung C&T and 0.08 percent of preferred stocks of Samsung Electronics as well as 0.01 percent of Samsung SDS. With the huge amount of stock assets inherited, the late chairman's bereaved family members are expected to be liable for more than 10 trillion won worth of inheritance tax. Even if they choose to pay the tax in a five-year installment plan, they are slated to pay about 1.8 trillion won annually.
Market analysts forecast the heirs of the late legendary business tycoon are likely to prepare the humongous sum of the inheritance tax money mainly from dividends from their owned equities; that's why market watchers expect key Samsung affiliates' dividend rates would see increases in the near future, and such expectations actually raised the companies' stock prices on Monday.
Lee Jae-yong, Samsung Electronics vice chairman and the son of the late chairman, currently holds 17.33 percent of Samsung C&T ― the parent company of Samsung conglomerate that controls Samsung Life, which in turn controls Samsung Electronics ― and 9.2 percent of Samsung SDS, along with 1.54 percent of Samsung Engineering, 0.7 percent of Samsung Fire & Marine Insurance, 0.09 percent of Samsung Electronics and 0.06 percent of Samsung Life.
“Because of market expectations that dividends would be a primary source of the inheritance tax money, affiliates that Samsung Electronics Vice Chairman Lee has equity in, including Samsung C&T, Samsung SDS, Samsung Life and Samsung Electronics, are expected to strengthen dividend policies for shareholders,” said Yoo Jong-woo, an analyst at Korea Investment & Securities.
“Considering that Samsung Life controls the conglomerate's main financial arms through its takes, such as Samsung Card, Samsung Fire, Samsung Securities and Samsung Asset Management ― the affiliates that can generate solid and stable profits ― Samsung Life's dividends are also expected to be one of the key sources of the tax.”
Based on such market expectations, Samsung affiliates' stock ended higher at Monday's closing. Samsung C&T ― the parent company of which Lee Jae-yong owns 17.33 percent of the shares ― logged the highest jump among the affiliates, as it ended at 118,000 won, which is a 13.46 percent hike from the previous trading session. Samsung SDS and Samsung Life also rose by 5.51 percent and 3.80 percent, respectively, while Samsung Electronics increased by 0.33 percent.
“Samsung C&T is expected to enjoy the boon the most from markets' expectation that it would increase dividends,” said Kim Dong-yang, an analyst at NH Investment & Securities. “While Samsung Electronics would move according to its business fundamentals, Samsung Life and Samsung SDS might have a stock overhang issue ahead.”
The experts said that Lee's children ― Samsung Electronics Vice Chairman Lee Jae-yong, Hotel Silla CEO Lee Boo-jin and Samsung Foundation head Lee Seo-hyun ― could sell parts of their Samsung SDS equities, as the selling of the affiliate's equities would not affect the family's control over the conglomerate. This could limit a possible further price hike range of the two Samsung affiliates.