Samsung Plunges Over 8%... Why the Divergence in Shareholder Return Reactions?

[Anchor]

Samsung Electronics unveiled a massive shareholder return policy worth up to 110 trillion won, but its stock plummeted by more than 8% today (the 24th). SK Hynix, which had previously announced its own shareholder return plan, also saw its shares fall, but the margin of decline was relatively smaller.

Reporter Kim Hye-min analyzes the reasons behind this.

[Reporter]

The downward trend for Samsung Electronics, which first appeared on alternative trading systems following its shareholder return policy disclosure last Friday, continued into today's regular market session.

The decline widened, closing down 8.7% at 257,000 won.

SK Hynix also declined, but limited its loss to the 3% range.

The temperature difference between the two semiconductor giants is interpreted as being driven by the details of their shareholder return measures.

While Samsung's announced scale of 90 trillion to 110 trillion won is the largest in history, nothing has been finalized beyond a 30 trillion won cash dividend for the third quarter.

Compared to SK Hynix, which announced it would purchase 40 trillion won worth of treasury shares and retire all of them, Samsung's plan was evaluated as falling short of expectations.

The market generally perceives treasury stock retirement—which permanently increases per-share value by reducing the number of issued shares—as a more direct stock price booster.

[Lee Hyo-seop / Director of Financial Industry Research, Korea Capital Market Institute: When retirement takes place, earnings per share increase immediately... In the U.S. as well, share buybacks and retirements have had a major impact on rising stock prices.]

Expectations that large-scale treasury stock retirement may be difficult for Samsung Electronics in its remaining 60 trillion to 80 trillion won shareholder return were also reflected.

This is because financial affiliates Samsung Life Insurance and Samsung Fire & Marine Insurance hold Samsung Electronics stakes right up to the 10% limit under the Financial Industry Separation Act, and if Samsung Electronics retires its treasury shares, that limit would be exceeded.

Therefore, large-scale retirement is difficult, and even if a portion is retired, Samsung Life and Fire would be forced to dump shares exceeding the limit onto the market.

In the securities industry, possibilities are also being raised regarding purchasing and retiring preferred stocks, which lack voting rights and are thus excluded from stake-limit calculations.

[Kim Soo-hyun / Head of Research Center, DS Investment & Securities: Preferred stocks are always cheaper than common stocks. If you buy and retire more of them, it has the effect of reducing the total number of issued shares more significantly. In this case, earnings per share increase even more for common stockholders as well.]

Samsung Electronics' remaining shareholder return scale and specific methods are scheduled to be decided at a board meeting in January next year.

(Camera Reporter: Ha Ryung | Video Editor: Park Choon-bae | Designer: Choi Jae-young)
※ Please note: This article was translated by AI and may contain errors.