SK Hynix headquarters in Icheon, Gyeonggi Province. Yonhap News
The market sway once wielded by SK Group is fading fast. Only last month, the group accounted for more than half of all trading among South Korea’s business conglomerates. That share has now dropped into the 30% range, while trading in other major groups such as Samsung, Hyundai Motor, LG and Hanwha has risen across the board. As the concentration of trading in SK hynix (000660.KS) and SK Square (402340.KS) eases, investor attention is spreading to other groups’ stocks.
The 19 SK Group affiliates accounted for 35.08% of total trading among all 44 business conglomerates, made up of 265 affiliates, according to the Korea Exchange on the 10th. The combined trading came to 15.842 trillion won ($11.4 billion). Samsung Group followed at 33.47%, narrowing the gap between the two to 1.61 percentage points. Hanwha Group came next at 4.65%, followed by LG Group at 3.68% and HD Hyundai Group at 3.31%.
The picture was different just over a month earlier. On the 3rd of last month, SK Group’s share of trading reached 51.67% — the group’s affiliates alone made up more than half of all conglomerate trading. Samsung Group’s share stood at 32.29%, a gap of 19.38 percentage points behind SK Group. At the time, trading was heavily concentrated in the two so-called “emperor stocks,” SK hynix and SK Square. SK hynix drew concentrated buying through early last month after peaking at 2.919 million won on June 22, and SK Square’s trading surged alongside it.
But as a correction took hold, led by semiconductor stocks, the concentration of trading in SK Group unwound quickly. SK hynix shares fell 41.36%, from 2.425 million won on the 3rd of last month to 1.422 million won on the 10th of this month. Over the same period, SK Square dropped 40.28%, from 1.589 million won to 949,000 won. The market sees the declines as reflecting concerns that chipmakers will struggle to sustain their current high operating margins.
Analysts view SK hynix’s recent decline as excessive. They expect meaningful revenue contributions from fourth-generation high-bandwidth memory (HBM4) and rising artificial intelligence investment by North American cloud service providers (CSPs) to support earnings over the medium to long term. “Considering the retained earnings set to surge over the next three years, the current share price appears oversold, and we maintain our buy-and-hold strategy,” said Roh Keun-chang, an analyst at Hyundai Motor Securities.
SK Group’s diminishing influence was also clear in market capitalization. On the 3rd of last month, Samsung Group made up 39.94% of the total market value of all conglomerates and SK Group 35.39%, narrowing the gap to 4.55 percentage points. But in about a month, Samsung Group’s share rose to 40.04% while SK Group’s fell to 28.83%, widening the gap to 11.21 percentage points. Hyundai Motor Group followed at 5.54%, LG Group at 4.31% and HD Hyundai Group at 3.38%.
Other major groups, by contrast, all saw their trading shares rise. Over the same period, Samsung Electronics (005930.KS) shares fell 25.69%, from 309,500 won to 230,000 won — a relatively smaller drop than SK hynix and SK Square. As the concentration in SK Group eased, Samsung Group’s trading share rose 1.18 percentage points, from 32.29% to 33.47%. Hyundai Motor Group gained 0.68 percentage point and LG Group 1.27 percentage points, while Hanwha Group rose 2.98 percentage points. Trading once concentrated in SK Group flowed out to other groups’ stocks.