Value context and insight. lkm@koreatimes.co.kr
Retail investors crying foul over Samsung stock falls
A bus purchased by a group of investors seeking abolishment of short-selling turns in a street in downtown Seoul. Korea Times file
By Lee Kyung-min
By Lee Kyung-min
Over 4.5 million Samsung Electronics shareholders are blaming short-selling for the lackluster performance of the shares over the past few months.
As of the first half of this year, the electronics giant's shares are held by 4,546,497 retail investors, accounting for 64.9 percent of the total. Short-selling is widely used by foreign and institutional investors seeking to profit after selling borrowed shares at a lower price in a bear market at the expense of retail investors.
Market experts say the shares will gain upward momentum buoyed by an impressive third-quarter performance, a claim dismissed by many retail investors as unlikely given the continued rise in shorting by institutional and foreign investors.
Retail investors bought a combined 32.93 trillion won ($27.74 billion) worth of Samsung shares this year partly because of various research notes, most of which presented 100,000 won per share. But the share continues to hover closer to 70,000. It closed at 73,200 won, Oct. 1, down 900 won, or 1.21 percent, from the previous session. This marks a decrease of more than 24 percent since the beginning of the year after hitting an all-time high of 96,800 won.
The sharp downtrend began in August when the U.S.-based global investment bank Morgan Stanley issued a report on the softening demand for semiconductors, a factor contributing to chilled investor sentiment. Morgan Stanley said at the time of the report's release that although chip prices are still rising, “the rate of change in the semiconductor industry is approaching its peak because supply is catching up with demand.”
The report, best summarized by the bank's conclusion at the time that “winter is here” for the semiconductor industry, sent the share price down a further 13 percent.
The price fell to 72,500 won, Aug. 20, down from 83,300 won Aug. 5. Retail investors bought over 7.2 trillion won in the cited period, whereas foreign and institutional investors sold more than 7.2 trillion won and 166.1 billion won worth of shares, respectively. The price remained low due to a partial resumption of short-selling. The amount shorted by sellers of Samsung shares increased to 160.3 billion won, as of Sept. 28, up from 105.3 billion won a month earlier.
The price has since shown signs of a rebound, touching 77,800 won briefly on Sept. 28, but it sank back to the low-70,000 won level, in what many retail investors say is a price “trapped by the volume of stocks shorted by large institutional and foreign investors.”
The Financial Services Commission (FSC), the country's top financial policy regulator, maintains that an outright abolishment of short-selling is not an option, given Korea's heavy reliance on institutional and foreign investors that make up a combined 80 percent of local bourse transactions.