Pension funds sell as treasury shares come in; 'Samsung Electronics and SK hynix' move out of sync

[Financial News] As Samsung Electronics and SK hynix launched large-scale treasury share buybacks, pension funds moved to lock in profits. While buybacks are helping support the stock market’s downside, the market’s representative long-term investors are instead selling shares.
According to the Korea Exchange on the 1st, pension funds net sold about 717.2 billion won worth of Samsung Electronics shares from the 3rd of last month through that day. They were net sellers for three straight trading days from the 27th to the 31st of last month, offloading 169.7 billion won during that period alone.
The selling by pension funds coincides with Samsung Electronics’ treasury share buyback period. As Samsung Electronics pressed ahead with large-scale repurchases, other corporate entities net bought Samsung Electronics for seven consecutive trading days from the 24th of last month through that day. Net buying during that period reached about 3.5815 trillion won.
The securities industry sees Samsung Electronics’ expanded shareholder returns as a key driver of a future revaluation of the company’s value. Analysts estimate that the company has 110 trillion won in additional residual resources available, with 40 trillion won of that potentially used for treasury share buybacks and cancellations. Including the 70 trillion won forecast for cash dividends in the second half, the scale of shareholder returns could rise sharply.
Kim Dong-won, head of research at KB Securities, said, "Samsung Electronics’ earnings upgrade and expanded shareholder returns are the two key pillars that will drive a future rerating of the stock." He added, "If improved earnings raise the ceiling on corporate value, large-scale shareholder returns will lift the valuation floor and drive a revaluation of the stock."
A shift has also emerged in pension fund activity at SK hynix. The fund net bought about 301.8 billion won worth of SK hynix shares in August, but turned to net selling from the 26th of last month.
Pension funds net sold 9.5 billion won worth of SK hynix shares on the 26th of last month, followed by 63.8 billion won on the 27th, 11.7 billion won on the 28th, and 33.1 billion won on the 31st. They also net sold 9.3 billion won on the 1st. The fund has been a net seller for five straight trading days, with total net sales of about 127.5 billion won over that period.
SK hynix began its treasury share buyback on the 20th of last month. The company plans to acquire a total of 24.07 million shares on the open market by Nov. 19 and then cancel them in full. That accounts for about 3.3% of its outstanding shares. The company said it will cancel the repurchased shares within one to two weeks after purchase and will also consider additional buybacks and cancellations depending on future cash flow and market conditions.
The large-scale treasury share buybacks by the two companies have already become a major supply-and-demand factor in the domestic stock market. Since the 20th of last month, the cumulative buyback amount by Samsung Electronics and SK hynix had reached 11.8365 trillion won as of the 31st of last month. Samsung Electronics bought 3.0545 trillion won worth of shares, while SK hynix bought 8.782 trillion won, absorbing selling pressure from foreign investors and institutions.
A securities industry official said, "It is difficult to directly link treasury share buybacks with pension fund selling, but there is clearly a supply-and-demand effect as large-scale buybacks absorb institutional selling." The official added, "With pension fund selling continuing, treasury share buybacks can be seen as playing a role in supporting the stock price floor."
[email protected] Choi Doo-sun Reporter