Samsung Electronics continues to plunge on investor pessimism

Samsung Electronics headquarters in Seoul / Yonhap

By Lee Kyung-min

• Published Oct 10, 2024 4:13 PM KST
• Updated Oct 10, 2024 4:19 PM KST

Shares of Samsung Electronics sank to a 52-week low of 58,900 won ($44.25) on Thursday, hamstrung by the reverberating shock of the firm's weaker-than-expected third-quarter earnings, market watchers said.

Further clouding the outlook for one of the country's most popular stocks is the continued underweight position recommendations by brokerages.

Observers say the grim development prompts retail investors to abandon the Korean equity market, defined by the decades-long undervaluation of its stocks. This is often referred to as the "Korea discount."

Many opt for the U.S. market, where global IT leaders generate robust earnings, as evidenced by the steady rise in Korean retail investors' holdings of foreign currency securities over the past few years.

According to the Korea Exchange, the Samsung chipmaker's share price traded below the psychologically significant 60,000 won barrier, at around 9:30 a.m.

It was 1.33 percent down from the previous session and a continued drop from the previous high of 88,800 won valued on July 11.

The figure is a further decline from 60,300 won, Tuesday, when the firm announced the earnings for the July-September period. Sales came to 79 trillion won and operating profit at 9.1 trillion won, undershooting the market consensus of 80.8 trillion won and 10.3 trillion won, respectively.

Brokerage insiders say the semiconductor affiliate of Samsung Group will not see a meaningful rebound in the months to come, bogged down by an increase in both inventory and marketing costs in the fourth quarter.

The brokerage affiliates of Hyundai Motor, NH NongHyup and KB lowered their target price to between 90,000 won and 80,000 won. It was down from the previous price of between 104,000 won and 95,000 won.

A Hyundai Motor Securities report said Samsung's earnings were significantly poor even when accounting for one-time costs.

"The underperformance is pronounced, especially compared to its global competitors including Micron. The underwhelming performance is likely to continue through the fourth quarter, a seasonally challenging period for businesses," it said.

Meanwhile, Korea Securities Depository data showed that the holdings of U.S. foreign securities by retail investors in the country stood at $137.9 billion in the third quarter, up 8.3 percent from the previous quarter.

The amount settled over the same period came to $174.6 billion, up 37.5 percent.

Of them, foreign stocks accounted for over $102 billion as of end-September, up 7.8 percent from $94.6 billion from the previous quarter.

The holdings of foreign bonds over the same period rose to $35.9 billion, up 9.8 percent.

Nearly three-fourths of the total securities, or 74.4 percent, was invested in the United States, followed by Europe, Japan, Hong Kong and China.

Of the stocks, about 90 percent was invested in the U.S. at $91.8 billion, up 7 percent from the previous quarter.

The Top 10 most popular U.S. stocks Koreans invested in included Tesla, Nvidia, Apple and Microsoft.