Samsung Foreign Ownership Hits 18-Year Low Despite Record Earnings

Samsung Electronics’ headquarters in Seocho-gu, Seoul. Foreign investors continue to reduce their holdings in Samsung Electronics despite the company posting record quarterly operating profit exceeding 100 trillion won, approximately $74.77 billion. Persistent selling pressure has weighed on the stock despite strong earnings, pushing foreign ownership to its lowest level since the global financial crisis nearly 19 years ago. According to the Korea Exchange on Oct. 12, foreign ownership of Samsung Electronics stood at 46.38% as of Oct. 8, its lowest level in approximately 18 years and nine months, since Jan. 11, 2008, when it stood at 46.35%. The foreign ownership ratio, which had climbed as high as 52.40% earlier this year, began declining amid external headwinds, including the Middle East conflict in March, and fell to the low-46% range this month. SK hynix has experienced a similar trend. After maintaining foreign ownership above 50% since last year, the chipmaker saw its foreign ownership ratio fall to 49.59% as of Oct. 8. The figure has dropped by more than five percentage points from this year's peak of 56.41%, slipping below the psychologically significant 50% threshold. Amid declining foreign holdings in the two semiconductor heavyweights, foreign ownership in the KOSPI electrical and electronics sector also fell from 40.87% at the beginning of the year to 38.09%. Of particular concern to the market is the divergence between earnings performance and share prices. Samsung Electronics reported preliminary third-quarter revenue of 195 trillion won and operating profit of 107.4 trillion won, becoming the first South Korean company to surpass 100 trillion won in quarterly operating profit. Nevertheless, its shares fell 2.42% on the day of the announcement, closing at 262,000 won. The muted stock market response despite improving earnings highlights the persistent pressure from foreign selling. The scale of foreign selling has also increased sharply. Foreign investors have recorded cumulative net sales of more than 197 trillion won on the KOSPI market this year, nearly 50 times the approximately 4 trillion won recorded last year. Market analysts attribute the outflows to macroeconomic uncertainty, slowing growth in memory chip prices and concerns over deteriorating supply-demand conditions as manufacturers aggressively expand production capacity. Analysts caution that strong earnings alone may not be sufficient to bring foreign investors back. Lee Jae-won, an analyst at Yuanta Securities Korea, said the current environment makes it difficult to expect a structural shift in investor flows based solely on strong earnings. Rather than attempting to predict when foreign investors will return, he recommended monitoring concrete signs of renewed buying and adopting a staggered purchasing strategy as selling pressure begins to ease.