[New Market Cap Ranking] ① 30 Major Groups Lose 363 Trillion Won... Semiconductor Slump Hits Hard

Editor's NoteDomestic stock markets have continued to underperform this year. As central banks worldwide have rushed to raise benchmark interest rates to combat inflation, funds have been flowing out of the stock markets. The KOSPI, which was above the 3,300 level last July, has fallen to the 2,300 level. It has dropped nearly 1,000 points over the past 16 months. Coupled with the semiconductor industry's downturn, the leading domestic stock Samsung Electronics has also struggled to maintain strength. The U.S. central bank, the Federal Reserve (Fed), after the November Federal Open Market Committee (FOMC) meeting, projected that the peak benchmark interest rate would be higher than previously expected. The stock market, which had been rising based on asset liquidity until last year, is likely to continue showing weakness next year. It is difficult to predict the future without understanding the current changes. Asia Economy conducted a comprehensive survey of changes in market capitalization of corporate groups with over 1 trillion won in market cap in the domestic stock market. As of the closing price on July 6 last year, when the KOSPI hit an all-time high, there were 219 corporate groups with market capitalization exceeding 1 trillion won, but this number decreased to 164 as of last month’s 31st. We examine the changes in rankings and market capitalization increases and decreases of the top market cap corporate groups.

[Asia Economy Reporter Park Hyungsoo] The market capitalization of the top 30 major domestic stock market groups has evaporated by about 363 trillion won over the past 16 months. The domestic stock market has been hit by U.S. interest rate hikes and economic uncertainty, with the semiconductor industry's downturn causing significant stock price declines for Samsung Electronics and SK Hynix, which hold large market cap shares. Platform companies such as Naver and Kakao also saw substantial decreases in market capitalization.

According to Asia Economy’s survey on the 4th, the combined market capitalization of the top 30 corporate groups with stock values exceeding 1 trillion won in the domestic stock market was 1,517 trillion won as of the end of last month. This is a shrinkage of 363 trillion won from 1,880 trillion won as of July 6 last year, when the KOSPI index recorded an all-time high. During this period, the KOSPI fell by about 30%, and the market capitalization of major companies decreased by 19.3%. This suggests that the stock price decline of the top market cap companies was not as steep compared to other companies within the index.

By group, Samsung Group and SK Group saw their market capitalizations evaporate by 162 trillion won and 83 trillion won, respectively. These accounted for 67% of the total market cap decrease among the top 30 corporate groups. As demand for memory semiconductors such as DRAM and NAND declined, Samsung Electronics’ operating profit in the third quarter this year fell by 31.4% compared to the same period last year. In the third quarter, Samsung Electronics’ semiconductor division recorded an operating profit of 5.12 trillion won, about half of the 10.06 trillion won recorded in the third quarter of last year. Samsung Electronics, the world’s number one memory semiconductor company, declared "no production cuts" when releasing its provisional third-quarter results. Semiconductor prices are not expected to rebound anytime soon.

The value of shares held by group heads and owner families also dropped sharply. The share value held by Lee Jae-yong, who was inaugurated as chairman of Samsung Electronics on the 27th of last month, fell from 15.6 trillion won to 12.2 trillion won, a loss of 3.4 trillion won. The share values of Hong Ra-hee, former director of the Samsung Museum of Art Leeum, Lee Boo-jin, president of Hotel Shilla, and Lee Seo-hyun, chairwoman of the Samsung Welfare Foundation, also decreased by 4.2 trillion won, 1.9 trillion won, and 2.1 trillion won, respectively. The share value held by Chey Tae-won, chairman of SK Group, decreased by 800 billion won.

Platform companies such as Naver, NCSoft, and Kakao Group showed the largest decreases in market capitalization. During the period, these three groups lost 58.7% (39 trillion won), 53.5% (10 trillion won), and 48.8% (37 trillion won) of their market capitalization, respectively, with the value of their listed stocks falling below half. The share value of Kim Beom-su, founder and chairman of Kakao, plummeted from 9.3 trillion won to below 3 trillion won.

Despite the overall decline in market capitalization of major groups, companies related to secondary batteries and materials led the market and improved their rankings. LG Group, which successfully listed LG Energy Solution, overtook SK Group, while EcoPro, Saeronics, and Youngpoong Group increased their market capitalization by 9 trillion won, 6 trillion won, and 4 trillion won respectively during the same period, significantly boosting their rankings. Celltrion Group and newly listed companies such as Krafton also secured top positions.

Analysis by Im Hee-jin, Heo Mi-dam