By Park Hyong-ki
Staff Reporter
Samsung Corp. and other Samsung Group affiliates' shares took a heavy beating Tuesday, after the group's chief Lee Kun-hee said he was resigning to take full responsibility for confirmed business irregularities.
Given that Samsung stocks account for one-tenth of the market capitalization, their deep plunge has weighed down the broader stock market. The benchmark KOSPI shed 12.99 points, or 0.72 percent, to close at 1,787.49.
Although the news ignited worries over a management vacuum at the country's largest conglomerate, analysts said the ``Samsung effect'' will be short-lived.
``I always believe stocks perform in accordance with corporate balance sheets, and given that Samsung fundamentals remain solid, the effect will not last long on either Samsung shares or the broader market,'' said Kim Seung-han, an analyst of CJ Investment & Securities.
Woori Investment & Securities analyst Ted Oh also agreed with Kim, saying that concerns over Samsung will abate soon, and its shares have room to rise on improved earnings.
``Investors' concerns over Samsung are short-term,'' said Oh. ``Better-than-expected earnings from group units such as Samsung Electronics and Samsung SDI will spur equity growth.''
Samsung Electronics, the No.1 company in terms of market capitalization, is expected to post solid earnings for the first quarter on healthy businesses of LCDs and mobile phones. It is expected to reveal its earnings result at the end of this week.
The group, its chairman Lee and his family members have been under investigation by a special prosecution team for business irregularities involving bribery and a slush fund.
Besides the chairman resigning, the company said it has no immediate plan to transform into a holding company, and no plans to invest in the banking sector, but it will strengthen its secondary financial units in the brokerage, credit card and insurance sectors.
Of Samsung shares, Samsung Corp. took the biggest dive as expectations of a Samsung holding company headed by Samsung Corp. have disappeared. ``Investors pulled their money out of Samsung Corp. as such hopes fell,'' said Kim of CJ Investment.
Daishin Securities chief researcher Koo Hee-jin said, ``In the long-term, Samsung shares will positively grow on increased transparency and governance.''
Samsung Corp. shed 7,000 won, or 9 percent, to 70,700 won; Samsung SDI fell 1,800 won, or 2.2 percent, to 79,700 won; Samsung Heavy Industries ended down 300 won, or 0.88 percent, at 33,700 won; and Samsung Securities dropped 4,100 won, or 4.78 percent, to 81,600 won.
Samsung Electronics shares, meanwhile, rose 1,000 won, or 0.14 percent, to 675,000 won.
phk@koreatimes.co.kr