Trading of Samsung Electronics shares has been suspended for three business days from Monday as the face value of the shares has been lowered from 5,000 won (US$4.63) to 100 won, according to the Korea Exchange (KRX). The local stock market was closed on Tuesday in observance of Labor Day.
Shares of the tech giant were off limits for most ordinary investors due to their prohibitively high price.
Upon the trading resumption on Friday, the big-cap shares will move in a range of 37,100 won and 68,900 won, factoring in the 30 percent limit based on the end price of 2.65 million won logged on its final trading day.
But analysts forecast that the stock prices will go up further, at least over the short term, as the 50:1 stock split will effectively add fresh liquidity in real terms.
“If history serves as any guide, a stock split timed with improved corporate performances can be a boon for share prices,” KB Securities expert Kim Dong-won said.
The tech behemoth reported a 52.11 percent growth of its first-quarter net profit to 11.6 trillion won, fueled by improved returns from its crucial chip operations and smartphone sales.
“After the move, the daily trading volume is expected to go well over 10 million shares, and those increased flows will jack up stock prices,” Kim Kyung-min, an analyst at Daeshin Securities, said, pointing to similar figures seen in the trading of such global semiconductor giants as Intel Corp. and Micron Technology Inc.
Over the past year, Samsung’s average trading volume per day reached 250,000 shares, and top chipmaker SK hynix reached 4.24 million.
The recent trading pattern offers a glimpse of the high expectations that the exalted shares will be reborn as a popular investment tool for ordinary investors.
Throughout last week, retailers picked up a net 1.14 trillion won worth of the Samsung shares, a stark contrast to foreign and institutional investors, who sold off a net 1.12 trillion won and 1.27 trillion won, respectively.
The proportion of ownership by retail investors also rose, from 16 percent last year to around 28 percent this year on average, and the figure further expanded to 34.96 percent for last week alone, according to the data by NH Investment & Securities.
Such a liquidity impact, however, could run out of steam, analysts warned, and it may take time for the company’s shares to reach record high levels, according to analysts.
The previous peak of 2,681,000 won per share was logged on November 1, 2017, which translates to 57,000 won post-split.
“Samsung Electronics presents a conservative outlook for its second-quarter profits. Hence, its share price would gain any actual traction in the second half of this year,” Daeshin analyst Kim said.