Remaining Cautious: Why Asset Manages Can’t Buy Samsung Electronics’ Stocks despite Its Price Rise | BusinessKorea

Wednesday, February 21, 2018

Most asset management companies are remaining cautious about selling stocks of Samsung Electronics.
Most asset management companies are remaining cautious about selling stocks of Samsung Electronics.
20 March 2017 - 11:15am
Jung Suk-yee

Samsung Electronics' stock price exceeded 2.1 million won (US$1,857) per share on March 17, reaching another record high. Top cap Samsung Electronics rose 1.34 percent to end at a fresh record high of 2,120,000 won (US$1874), marking the fifth straight session of gains. The company’s market capitalization also stood at 298.51 trillion won (US$263.94 billion), approaching 300 trillion won (US$265.25 billion). Only individual investors bought Samsung Electronics’ stocks as foreign and institutional investors, who have been the main buyer started selling on the day.

With the inexorable rise of Samsung Electronics, asset management companies are in quandary over when is the right time to sell the company’s stocks considering the rising earnings rates of funds boosted by Samsung Electronics. However, they all agreed, “We will not sell the stocks in a short period of time.” Choi Sang-hyun, executive director at Baring Asset Management Limited, said, “We are watching Samsung Electronics’ rising stock prices with careful consideration. The prices are on the increase due to its good performance, not a certain issue, so the winning streak will not be suddenly broken.” Some said, “Favorable factors, such as the business conditions in the semiconductor industry and entry to the automotive electronics market after the acquisition of Harman, are already reflected in the prices.”

Huh Nam-kwon, vice president of Shinyoung Asset Management Co., expressed his rosy expectations about the improvement of governance structure as well as performance. He said, “It is not the time to sell Samsung Electronics’ stocks yet due to expected changes in its performance and governance structure and the bullish trend on the overall KOSPI market.” Samsung Electronics accounts for 10.82 percent in the Shinyoung Value High Dividend Fund, which is managed by Huh.

However, there is a reason that asset management firms cannot purchase Samsung Electronics’ shares despite the positive outlook on its rising prices. They said, “We have not enough money to buy more Samsung Electronics’ stocks” due to the fact that investors turn to selling-spree for fund repurchase when the KOSPI surpasses the 2,100 level. About 1.24 trillion won (US$1.09 billion) slipped through domestic equity funds in the last month alone.

Institutional investors, as a whole, are going on a selling spree, though most asset management companies are remaining cautious about Samsung Electronics. They sold 819.6 billion won (US$724.67 million) worth of Samsung Electronics’ stocks this month. They also recorded the net sale of 11,535 shares on the day to comply with the request of profit taking.




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