Korea's large-cap stocks nosediving to pre-pandemic levels

The Korea Times

The Korea Times

Finance

Mon, October 2, 2023 | 10:40

Companies

Korea's large-cap stocks nosediving to pre-pandemic levels

Posted : 2022-06-17 16:35

Updated : 2022-06-17 16:45

The corporate logos of Samsung, Naver and Kakao / Courtesy of each firm

By Lee Min-hyung

Korea's large-cap tech stocks are nosediving at an alarming pace, leaving retail investors of Samsung Electronics, Kakao and Naver with a growing sense of frustration.

The three companies enjoyed their heyday in 2020 and 2021 amid the earlier part of the ongoing COVID-19 pandemic, as their stock prices soared to historic levels on the coronavirus-induced near-zero interest rates.

Shares of Samsung Electronics, the nation's most valuable company, hovered around 60,000 won shortly after the pandemic broke out in March 2020. But with the Bank of Korea (BOK) cutting the key rate down to 0.5 percent, retail investors went on a buying spree of the shares, helping boost the stock value to a historic high of 96,800 won in January 2021.

But Samsung's shares have since been on the steep decline, falling below the pre-pandemic level of 59,600 won on Friday amid growing market fears of global monetary tightening. With the BOK raising the key rate to 1.75 percent in less than a year, the benchmark Kospi has in recent months lost momentum for growth. Samsung shares also failed to defend its valuation against the overall stock fall here and abroad.

"It is hard to deny that the economy has entered a path of slowdown," Eugene Investment & Securities analyst Lee Seung-woo said. "The ever-growing interest rate will continue to come as a big burden on the global economy in the latter half of 2022."

Shares of Kakao and Naver, two representative growth stocks in Korea, are also showing a steep downward trajectory this year on a similar reason.

The two companies appeared to become the biggest beneficiaries of the pandemic, with their stock growth making headlines every day until the first half of 2021. Kakao shares were traded below 50,000 won before the pandemic began, but skyrocketed to over 170,000 won in June 2021, becoming a sensation particularly among retail investors.

But shares of the operator of Korea's dominant mobile messenger app walked a similar path as Samsung. The stock price of the company fell to around 72,000 won on Friday.

Naver shares almost halved from its historic high of 468,000 won in September of last year. The top internet portal operator here is being traded at 238,000 won as of Friday afternoon.

mhlee@koreatimes.co.kr