Samsung stocks fluctuate over arrest warrant for heir Lee
By Lee Min-hyung
Stock prices of Samsung Electronics have fluctuated Monday amid the uncertain future of the firm’s control tower, after the nation’s prosecution requested an arrest warrant for Vice Chairman and Samsung Group heir apparent Lee Jae-yong.
Shares of the nation’s largest technology firm closed at 1.833 million won ($1,550) on the Seoul bourse, down 40,000 won or 2.14 percent from the previous trading day. The stock price fell to 1.816 million won at one time amid lingering uncertainty over whether the prosecution will arrest Lee over the firm’s alleged involvement in the recent political upheaval surrounding President Park Geun-hye and her close confidant Choi Soon-sil.
Expectations were that the prosecution’s decision may drive down Samsung shares by a huge margin, in the face of Samsung’s alleged links to the nation’s worst-ever political crisis. But market insiders said the decline is not as grave as they had expected, and the firm will not suffer long-term effects over the arrest warrant issued for Lee.
This is because the months-long controversy has tarnished the firm’s brand value to some extent, but its stock price has shown upward momentum.
On Thursday, Samsung Electronics shares hit a record high, closing at 1.94 million won, up 26,000 won from a day earlier. This was due to the firm’s robust outlook for the fourth-quarter earnings despite its involvement in the political scandal. Earlier this month, the company posted 9.2 trillion won in the fourth-quarter estimated operating profit, up 49.84 percent from a year ago, backed by rosy expectations for its semiconductor unit.
“The Choi gate scandal is not breaking Samsung’s systems in the short run,” Daishin Investment and Securities analyst Park Gang-ho said. “The firm’s fundamentals will remain in place.”
This reflects that market sentiments for DRAM and NAND flash memory will be on an upward trajectory during at least the first half of the year amid the rising demand for larger storage capacity in computers and mobile devices.
Following the prosecution’s announcement, Samsung expressed deep regret, dispelling any suspicions that the firm had any intention to receive preferential treatment from the government by offering financial aid to Choi and her family.
Samsung-Harman deal to have limited impact on Samsung stocks
Market experts also dispelled concerns over a recent class suit filed by Harman International, as the move is conventional for an acquisition in the United States.
“Such lawsuits are a typical phenomenon taking place during M&A processes from firms listed in the U.S. stock market,” said Jeff Kim, an analyst from KB Securities.
“Both firms are likely to finalize the deal during the first quarter of this year through a shareholders’ meeting.”
The opposition from the Harman shareholders will not hold back completion of the $8 billion all-cash transaction, according to the analyst.
Earlier this month, a group of Harman shareholders filed the fiduciary duty lawsuit against Harman CEO Dinesh Paliwal and Harman board members. The voiced complaint is that the merger undermines their rights, as it is flawed for some terms of contract such as a $240 million termination fee.
The U.S.-based auto-parts manufacturer plans to hold a shareholders’ meeting soon to decide whether to approve the deal with Samsung.