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Samsung bucks the trend by achieving market cap growth

By Korea Herald

Published : Nov. 1, 2011 - 17:19

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Samsung Group bucked the trend of the past four months by increasing its market capitalization while its rivals saw their combined stock value shrink amid the financial turmoil sparked by the global recession fears, data showed on Tuesday.

According to the data compiled by the Korea Exchange, FnGuide and Chaebul.com, Samsung’s market cap reached 238.08 trillion won ($213.91 billion) as of end-October, growing 6.05 trillion won from the end of June.

The country’s biggest conglomerate benefited from the solid performance of its flagship unit Samsung Electronics, whose share price rose 17.2 percent during the cited period to 142.59 trillion won.

Korea’s top 10 conglomerates combined, however, saw their market cap decline 7.3 percent to 601.74 trillion won during the same period, hurt by the market turbulences stemming from the eurozone debt crisis and the faltering recovery of the U.S. economy.

The market cap of Hyundai Motor Group dipped 8.5 percent to 139.15 trillion won. Hyundai’s key unit Hyundai Motor’s market cap went down 4.2 percent and Hyundai Mobis, an auto parts maker, saw its value tumble 19.3 percent.

Other conglomerates similarly suffered on the stock market: LG Group (-16.4 percent), SK Group (-8.4 percent), Lotte Group (-19.5 percent), Hyundai Heavy Industries Group (-30.9 percent), Doosan Group (-0.14 percent) and Hanwha Group (-27.3 percent).

“The main reason for the increased market cap of Samsung Group is the rise of share price of Samsung Electronics,” said Oh Hyun-seok, analyst at Samsung Securities. “Hyundai Motor Group does not have information technology units and LG Group lags behind Samsung in electronics and display businesses.”

Over the four-month period, the country’s benchmark index, the KOSPI, slid some 9 percent as foreign investors unloaded Korean and other emerging market shares to seek safe haven assets in the aftermath of the eurozone debt crisis.

Samsung’s shining performance benefited from its nimble move to produce a series of high-powered smartphones on the global market, offering a direct challenge to Apple’s iPhone along with its aggressive patent fight over related technologies.

LG, a longtime rival to Samsung in the high-tech industry, seems to have lost its edge as its mobile handset business failed to catch up with the broader shift of trends in favor of smartphones, sparked by iPhone’s global popularity.

Other conglomerates struggled as well largely because many of their businesses are hinged upon exports, whose conditions worsened noticeably in the past months due to the growing fears of a global recession.

Samsung’s strong performance, meanwhile, lifted the stock asset value of its chairman Lee Kun-hee, South Korea’s richest entrepreneur, by 4.1 percent over the period to 8.59 trillion won.

By Yang Sung-jin (insight@heraldcorp.com)