Samsung’s “stock split” announcement pulls down stock price

Samsung Share

Share prices of South Korean stock market  Behemoth Samsung Electronics dropped as a 50-to-1 stock split plan was announced on January 31.

Due to this, Samsung Electronics plunged its more than 2 million won (1,848 USD) share price and doubled its daily stock price fluctuation range and transactions.

On February 11, Korea Exchange (KX) said Samsung Electronics’ average range of daily stock price fluctuation arose to 3.86 percent up to 9. At the day of announcement, the company’s daily fluctuation range reached a 9.12 percent increase as its stock prices hiked to 8.71 percent and then decreased 0.4 percent on the same day.

Samsung’s daily average range of stock price fluctuation was at 2.17 percent before the news was made. The fluctuation range surged as much as 77.9 percent after that.

Despite of the domestic stock market’s growth in volatility, Samsung Electronics’ shares rendered continuous ups and downs. Although the stocks of SK Hynix and Hyundai Motor, two of Korea Composite Stock Price Index’s (KOSPI) top market cap performers, fluctuated at almost 20 percent over the same period, Samsung’s drops were not caused by the index movement.

After the stock split announcement, there was a slight decline on Samsung’s foreign investment ratio. The ratio of foreign investors in its stock holdings decreased over 1 percent from its 52.26 percent rate.

Some foreign investors doubted Samsung Electronics’ performance, therefore started selling shares despite of individual customers’ 2.4 trillion won (2.21 billion USD) share purchase.

On the brighter side, Samsung’s total amount of transactions increased to a daily average of 270,000 from 210,000 last year.

As price of stocks fall through the stock split, the volume of transactions and range of volatility can still further develop. This is the reason behind some market analysts’ statement that Samsung Electronics’ stocks can fall so low as to become “Samsung Coin” like digital currencies.

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