Samsung Electronics to split stock by 50:1

The world's biggest chipmaker Samsung Electronics has announced its first stock split,... and said it sees demand for semiconductors remaining strong this year, as it posted record annual profits in 2017.
Kwon Jang-ho reports.



In a surprise move, Samsung Electronics announced a massive stock-split for the first time in the company's history.
In a press release on Wednesday, the tech giant said it has approved a 50:1 stock split after it had received numerous requests for the stock split based on views that a high share price was a" hindrance to potential investors."
Samsung said its board of directors believes the stock split will make investing in Samsung Electronics more accessible and provide dividends to a wider range of investors.
The company added that it also expects to add "both liquidity and marketability to Samsung’s stock, which may contribute to enhancing corporate value in the long term."

Upon the announcement, the company's shares jumped as high as 8-percent before dropping to zero-point-2 percent when trade closed, although it ended up outperforming the rest of the main bourse KOSPI, which dropped by almost 1-point-3 percent.

The total value of Samsung's shares will not change, but the price of one share, which is currently worth around 24-hundred U.S. dollars, could in a few months time, post-split, cost less than 50 dollars.

The tech giant had previously rejected the possibility of such a move... but despite the value of its shares increasing by 41-percent last year, the about-face suggests the company might have had trouble attracting retail investors.

"I think Samsung Electronics did feel frustrated in regards to that. Its market capitalization is so large compared to the KOSPI. So it could feel as it is being undervalued, as many local investors did not invest in the company."

With Samsung shares taking up some 20-percent of the total value of the Korea's main stock exchange, investors are also bracing for broader impact on the Korean stock market.

"Overall I think it might improve the liquidity in the system, and to Samsung Electronics shares. I think that in order for more investors to invest, they have to pay more dividends. But if there is more payout ratio happening, then the Korean equity market as well as Samsung Electronics, should do much better in the future.

The final approval on the stock split decision will be made at the company's annual shareholders' meeting in March... and it's not expected to come into force until May.
Kwon Jang-ho, Arirang News.