Samsung Electronics sell-off drags down Kospi, with buyback support set to fade
Samsung Electronics fell 5.43 percent as investors rushed to secure eligibility for its record quarterly dividend while its share buyback nears completion.
The logo of Samsung Electronics is seen at its office in Seoul on July 30.AP/YONHAP
Samsung Electronics shares tumbled over 5 percent Monday, the last day investors could buy in to collect the company's record quarterly dividend.
The decline in Samsung Electronics shares weighed on the Kospi, contributing to its 2.7 percent drop the same day, as rising U.S. Treasury yields dampened investor sentiment for Korean stocks across the board.
Volatility may grow further from here. Samsung Electronics investors who have secured the dividend are free to sell from Tuesday, and the share buyback that has propped up the stock is nearly finished.
Samsung Electronics closed at 270,000 won ($198), down 5.43 percent from the previous session. A spike in U.S. Treasury yields while Korean markets were shut for the Chuseok holiday revived worries about high interest rates and weighed on chip stocks. SK hynix fell 5.05 percent to 1,768,000 won.
Samsung's record date for the dividend is Wednesday. Korean stock trades settle two business days after purchase, so investors had to buy shares by Monday to qualify. Trades executed in the after-hours session also count. Shareholders who sell on Tuesday keep their right to the payout, which is scheduled for November.
Samsung has pledged about 30 trillion won in cash dividends for the third quarter, including its regular dividend. Eugene Investment & Securities estimates the payout at 4,604 won per share, which would give an investor holding 100 shares about 460,000 won before tax. The exact amount will be finalized at a board meeting in October.
Expectations remain high because more is still to come at year-end. Samsung has estimated its shareholder returns for this year at 90 trillion to 110 trillion won. Using that range, Eugene Investment & Securities estimates Samsung has room to pay an additional 8,441 to 11,511 won per share when it settles its annual accounts. Combined with the third quarter dividend, that would bring the total to 13,045 to 16,115 won per share.
Visitors try out Samsung Electronics’ newly released Galaxy Z series, including the Z Fold8 device, at a Samsung store in southern Seoul on July 28.YONHAP
“The prospect of a dividend yield of around 6 percent through the end of the year could serve as downside support for the share price in the 230,000 to 240,000 won range,” Kang Song-cheol, an analyst at Eugene Investment & Securities, said.
The approaching end of the buyback is the wild card. As of last Wednesday, Samsung had bought 45.8 million shares, or 85.95 percent of the 53.3 million shares it filed to repurchase. At the recent pace of about 2 million shares a day, the buyback could wrap up in four trading days, nearly two months ahead of its scheduled end date of Nov. 21.
SK hynix, which also launched a 40 trillion won buyback plan in August, lost 5.05 percent to close at 1,768,000 won amid bearish market sentiment. Local media attributed some of the decline to a Reuters report that Solidigm, SK hynix's U.S.-based NAND flash subsidiary, is preparing for a potential initial public offering.
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
