November 22, 2024

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[THE INVESTOR] The recent decision by Korea Exchange (KRX) to shorten trading suspension of firms planning a stock split will benefit Samsung Electronics shares as they will help prevent risks for investors, according to market analysts on March 13.

“The latest decision by KRX to shorten trading suspension to three days, from the usual 15 days, is good news for investors since it will greatly help reduce uncertainty risks, caused by share price fluctuation before the stock split,” said Hwang Se-woon, an analyst at research firm Korea Capital Market Institute.

The nation’s sole securities exchange operator announced on March 12 that trading of Samsung Electronics shares will be suspended for three days before the firm’s scheduled stock split in a bid to minimize impact on the domestic stock market. Samsung accounts for more than 20 percent market capitalization of listed firms.

The tech giant on Jan. 31 announced a stock split of 50:1 to enhance shareholder value and make its shares, which have increased significantly over the past couple years to reach a high of 2,876,000 won (US$2,703), available to a broader range of investors.

In the wake of its decision, KRX setup a task force on Feb. 8 with the tech giant as well as other financial regulators and institutes, including Korea Securities Depository and Korea Financial Investment Association to revise the current trading rules to speed up the stock-split procedure and reduce any fallouts.

Under the existing rules, trading is usually halted for 15 days before a stock split to give the firm enough time to complete necessary processes, such as submission of old shares and rearrangement of a shareholder list.

Planned stock splits by other companies this year, including JW Life Science, Mando, FILA Korea and Boryung Pharmaceutical, will also be subject to the new rules.

Samsung said the exact schedule for a trading halt will be announced on March 23 when it holds a shareholders meeting.

It was previously forecast that the trading of Samsung shares would be temporarily stopped from April 25 to May 15.

By Kim Young-won (wone0102@heraldcorp.com)