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Top 10 conglomerates’ market cap exceeds W1,000tr

Samsung Group headquarters buildings in Seoul. (Yonhap)
Samsung Group headquarters buildings in Seoul. (Yonhap)
The recent spate of records in South Korea’s stock market on hopes of a global coronavirus containment has brought the market capitalization of the 10 largest business groups’ listed affiliates to fresh highs, data showed Wednesday.

As of Monday, the market cap of all 102 listed affiliates of the 10 largest business groups came to 1,069 trillion won ($964.3 billion), topping 1,000 trillion won for the first time in history, according to data from financial market tracker FnGuide.

All of them are chaebol-owned: Samsung, LG, SK, Hyundai Motor, Hanwha, Lotte, Shinsegae, GS, Posco and Hyundai Heavy.

Those of the Samsung conglomerate were estimated at 588.7 trillion won, followed by those of the SK conglomerate at 151.9 trillion won, LG at 122 trillion won and Hyundai Motor Group at 107.5 trillion won.

If combined, the market cap of the constituents -- including market bellwether Samsung Electronics -- took up over 50 percent of the entirety of the Korea Exchange’s main bourse Kospi and development board Kosdaq.

The news came as the Kospi set new highs for two straight days earlier this week, to 2,617.76 by Tuesday’s closing. Prior to this week, the Kospi’s previous all-time high closing was on Jan. 29, 2018, at 2598.19.

However, the Kospi ended its record run Wednesday, giving up its earlier gains after hitting an intraday high at 2,642.26 as soon as stocks began trading.

The Kospi closed at 2,601.54 Wednesday, down 0.6 percent from a day prior. The Kosdaq slid 0.8 percent to 865.12.

Samsung Electronics, whose market cap accounts for over 20 percent of the Kospi and Kosdaq combined, fell 1.6 percent to end the two-day winning streak. SK hynix and LG Chem both dropped 1.4 percent.

The retreat is attributable to net selling by Korean institutional investors. Korean institutions net-sold 617 billion won of stocks on the Kospi. This surpassed foreign investors’ 134.6 billion won in net purchasing of Kospi stocks. Foreign investors were regarded as the key driver of the bull run in Korea, as they net-bought Kospi stocks for 15 consecutive trading days until Wednesday.

“Korean firms’ growth momentum indicated in the third-quarter performance result might be driving the net buying of foreign investors in the Korean stock market,” wrote Park Seung-young, a strategist at Hanwha Investment & Securities, in a note to investors. Park added that foreign investors were likely to either have reacted to the third-quarter momentum or conducted a passive year-end rebalancing, meaning the foreign buying trend will lose steam as the year-end draws near.

Despite the retreat, market experts remain optimistic about a further Korean stock boost next year.

As the pandemic has so far had less impact on the domestic economy than those of foreign countries thanks to the nationwide effort to curb the spread of the virus, Kospi has room for further growth at between 2,700 and 2,900, while more retail participation in Korean stock buying in the wake of the pandemic would add to the market’s resilience to stock price falls, said Kang Hyun-ju, a research fellow at the Korea Capital Market Institute, in a seminar in Seoul on Wednesday.

By Son Ji-hyoung (