By Kim Tae-jong
Samsung Electronics shares managed to recover some losses Tuesday after they hit their lowest point in four months the previous day.
The world's biggest memory chipmaker’s shares rose 0.62 percent to close at 1,139,000 won, a technical rebound after huge drops for the third straight session.
Its stock fell as much as 4.23 percent on Monday to close at 1,132,000 won per share after local brokerage house Taurus Securities cut Samsung's second-quarter profit outlook by 240 billion won, citing persistent weakness in the chip sector. It lost almost 10 percent in just three days.
Due to the drop of the shares of the bourse bellwether, the Korea Composite Stock Price Index (KOSPI) also lost 1.19 percent to finish at 1,825.38 points that day, falling for the third straight session and retreating further from Wednesday’s five-week high.
Samsung’s recent share slump is largely driven by foreign investors’ massive selling.
They dumped some 490,000 shares worth 570 billion won in three days to Monday.
To prevent its stock from freefalling, the company said Monday that it expects sales of its new Galaxy S3 smartphone to top 10 million by July and predicted earnings from its handset division to exceed that of the first quarter but it wasn't enough to stop the bearish tide.
Analysts said it is not just a problem with the technology giant, arguing the local information technology industry is now hit hard by worries that global macroeconomic woes could also affect chipmakers’ sales in the second half of the year.
On Monday, SK hynix, the world's No 2 memory chipmaker, also tumbled 4.4 percent and gained only 50 won to close at 23,100 on Tuesday.
"The pace of recovery in DRAM prices has been much slower than previously estimated," said Han Seung-hoon, an analyst at Korea Investment & Securities. “This is compounded by worries that global macroeconomic woes could also eat into Samsung's handset sales in the second half of the year.”
Other analysts said Samsung is being hit hard by the eurozone crisis as foreign investors whose portfolios depend on the firm are now shedding their investments in the Korean market.
“They sold Samsung shares because they wanted to withdraw investments in the local market and they happened to have a lot of Samsung shares,” said Park Young-ju, an analyst at Woori Securities. “It doesn’t mean Samsung is not an attractive choice.”
Many analysts also argue that it may be the best time to buy Samsung shares as they are close to their bottom level. Its stocks have suffered a weeks-long slump after hitting 1,418,000 won on May 2.
“The big drops will be a temporary phenomenon due to concerns over decreased sales in the second quarter,” said Lee Sun-tae, an analyst at NH Nonghyup Securities. “But the company’s earnings will be bigger if the semiconductor market shows a recovery.”