Korean stock markets face trading decline on lack of momentum

Samsung Electronics Co.’s headquarters. [Photo by Lee Chung-woo]

South Korea’s benchmark Kospi and secondary Kosdaq markets are seeing a downswing in trading, posing a grim outlook for the fourth quarter.

According to the Korea Exchange on Tuesday, market bellwether Samsung Electronics Co. saw its daily trading volume and value hit annual lows of 5.82 million shares and 388.5 billion won ($294.1 million), respectively, on Monday. The previous low was seen on August 25 at 7 million shares while the high was 30.01 million shares on July 26.

The sharp decline in transactions of Samsung Electronics comes on the sluggish stock price, which has been on a downhill since July 14 when it rose to 73,400 won.

Local brokerages, however, have not yet downgraded the stock price target.

KB Securities Co. and Hi Investment & Securities Co. still maintain their price targets at 95,000 won. Hanwha Investment & Securities Co., Meritz Securities Co., and DB Financial Investment Co. have also kept their price targets unchanged at 94,000 won. Kiwoom Securities Co., Eugene Investment & Securities Co., and Yuanta Securities Co. have price targets at 90,000 won.

Hopes are that shares of Samsung Electronics gain momentum to surpass 90,000 won this year.

According to the Korea International Trade Association (KITA), the exports of domestic memory chips are projected to soar 26.9 percent on year in October, 85.5 percent in November, and 70.4 percent in December after falling 21.9 percent in September.

Analysts note that Samsung Electronics’ efforts to expand its market share in high-bandwidth memory (HBM) related to artificial intelligence are encouraging.

Shares of Korean secondary battery materials company EcoPro Co. have also lost momentum on the secondary Kosdaq market.

Its trading volume and value peaked each in April and July but they both have been losing since August. Trading volume, which remained an average of over 1 million shares per day, has been barely 500,000 shares recently. The trading value, which used to exceed 1 trillion won per day, also dropped to 540 billion won on Monday.

The decline in trading volume and value is raising concerns about weaker third- and fourth-quarter earnings at brokerages.