How Samsung shares will fare under Lee's chairmanship
Samsung Electronics Chairman Lee Jae-yong is approached by reporters as he leaves for lunch after appearing at the Seoul Central District Court for a trial hearing concerning his succession of leadership, Thursday. Yonhap
By Yi Whan-woo
The outlook for share prices of Samsung Electronics and other affiliates is attracting keen market attention after Samsung Electronics' de facto leader Lee Jae-yong ended 10 years of vice chairmanship and was officially promoted as its executive chairman, Thursday.
Analysts said Lee's promotion on its own will have little impact on the course of Samsung stock prices, which will depend instead on how elaborately Lee maps out a business vision for Korea's largest conglomerate.
Some of the shares of Samsung Electronics, Samsung SDI and Samsung C&T, among other affiliates finished bullish across the benchmark KOSPI on the day of Lee's promotion but retreated on Friday.
For instance, Samsung Electronics, the market bellwether and a leading global manufacturer in chips and smartphones, closed at 57,300 won ($40.28), Friday, down 3.7 percent from Thursday when it gained 0.17 percent.
Samsung C&T, a construction firm and the de facto holding company of Samsung, also retreated 0.84 percent to 118,000 won, Friday, after advancing 6.25 percent, Thursday.
Battery maker Samsung SDI closed at 727,000 won, Friday, remaining unchanged from a day earlier when it climbed 7.39 percent.
Such varying performances are rather heavily linked to relevant industry cycles and greater business circumstances within and outside Korea, according to the experts.
“Lee's promotion is certainly a plus for Samsung as risks associated with its leadership vacuum are fully cleared and it can move faster on setting goals as well as making decisions on pending businesses,” KB Securities Korea Equity Head Jeff Kim said. “But, in relation to the stock prices, the effect of promotion can be made only when the chairman visualizes business strategies in the medium to long terms.”
The conglomerate was left with no official leadership for the past few years after Lee's father, former chairman Lee Kun-hee, died in 2020. He had been hospitalized for the previous six years after suffering a heart attack and falling into a coma in 2014.
The junior Lee, while he succeeded his father and virtually took control of the company as vice chairman, was convicted of bribing ousted President Park Geun-hye in 2017.
He was imprisoned twice thereafter before being granted a special presidential pardon in August this year.
The lack of ownership forced CEOs of Samsung affiliates to focus on short-term strategies over long-term strategies requiring heavier responsibilities, according to the KB Securities analyst.
Such a “passive” working style was distinct in the midst of the increasingly challenging chipmaking industry due to U.S.-China trade war, supply chain disruptions and other geopolitical risks.
Samsung Electronics has correspondingly had no massive M&As since 2016, and the cash it has reserved amounts to more than 110 trillion won.
Kim Young-woo, an analyst at SK Securities, speculated Samsung stock prices may benefit from Lee's promotion, noting it hints at the possibility of M&As in the years to come.