Retail Investors Take Losses as Samsung Stock Tanks

  • By Hong Jun-ki, Kim Shin-young

    May 14, 2021 11:41

    Samsung Electronics shares closed down 1.88 percent on Thursday at W78,500 (US$1=W1,133). It was the first time the stock ended below W80,000 this year.

    They started trading at W78,900 but failed to rise above the previous session's closing price of W80,000. Since the average closing price last year was W81,000, millions of small investors who had rushed to the stock lost an estimated 4.8 percent of their money.

    So far this year, retail investors bought W49.14 trillion worth of stocks, surpassing last year's total of W47.49 trillion, and 50.4 percent was Samsung Electronics. They bought W9.6 trillion worth of ordinary Samsung Electronics shares and W6.1 trillion worth of preferred shares, and it yielded handsome returns averaging 49.4 percent.

    An electronic board at the Korea Exchange in Seoul shows the Korea Composite Stock Price Index closing down at 3,122.11 points on Thursday, the third day of a losing streak.

    The number of retail investors who own Samsung shares has surged from around 2 million at the end of last year to 5 million now.

    One securities insider said, "Most people who jumped into the stock market this year are probably conservative investors who had previously parked their money in bank savings. It looks like many of them invested in Samsung Electronics which posted high returns last year and is also the leading blue-chip stock in Korea."

    But many bought the stock at its peak of W96,800 on Jan. 11, and they would have lost 17.4 percent based on Wednesday's closing price of W80,000. Analysts say expectations have soared so much that earnings cannot possibly live up to the hype.

    Inflation fears in the U.S. have also hit the stock market. U.S. consumer price data for April released on Wednesday came out at a higher-than-expected four percent, causing the bourses of Korea, China, Japan and other parts of Asia to slide.

    Until now, the rapid pace of coronavirus vaccination in the U.S. have led to expectations of an economic recovery, but that also stokes inflation concerns, which could prompt the Fed to raise interest rates sooner than expected. If the Fed raises interest rates, Korea is highly likely to follow suit and retail investors who borrowed to put money in the stock market will feel the pinch.

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