[NewsNow] Samsung Electronics' 'buy treasury stock' card that it took out for the first time in 7 years...What's the view?

■ Host: Anchor Jung Ji-woong
■ Starring: Yeom Seung-hwan, director of LS Securities

* The text below may differ from the actual broadcast content, so please check the broadcast for more accurate information. Please specify [YTN NewsNOW] when quoting.

[Anchor]
Samsung Electronics' stock price, which fell to 40,000 Electronics last week, rose to the mid-50,000 won range after the announcement of a share buyback worth 10 trillion won. "Twinkle effect", "will continue the upward trend". Different prospects are coming out. Let's talk about this with Yang Seung-hwan, director of LS Securities. Welcome. I think I took a picture of the floor. Samsung Electronics Stock Is Now Rebounding?

[Yum Seung Hwan]
First of all, it seems to be improving in the short term. This is because Samsung Electronics has been exposed to a lot of bad news, but one of the biggest things was the lack of buying, there are no investors to buy, and foreigners and institutions have sold a lot. From that point of view, with the news of the treasury stock purchase last week, this means buying stocks. As a result, the expectation that the stock price would be protected came out, and it started last Friday, and of course, the stock price went back and forth from the flat range today.However, it is continuing to rebound.

In particular, the stock price has fallen 40% in a short period of time compared to this year's high point. The fall is very large, and we are usually called the liquidation value. If the PBR is more than 1x, the stock price has fallen to a level that is less than the value the company can receive when liquidating. So, even in the history of Samsung Electronics, stock prices have rarely fallen below the liquidation value in such a short period of time. So, as these things cause low-priced purchases, the stock price seems to be continuing a little good trend in the short term.

[Anchor]
There may be many reasons, but you mentioned it a little while ago. It should be said that the treasury stock purchase had the biggest impact, right?

[Yum Seung Hwan]
That's right. There are rumors of a crisis and for that reason, there are reports that foreigners actually sold nearly 18 trillion won of Samsung Electronics in the second half of this year. So, I sold very aggressively, but in the situation where such a sale came out, I announced the purchase of treasury stocks to defend the stock price, so this is positive. In particular, after purchasing 3 trillion won of treasury stock for three months, the stock is incinerated and eliminated. But after three months of calculation, if you buy about 50 billion won a day, you can buy about 3 trillion won.

So, if 50 billion won is usually sold a lot by foreigners, of course, it sometimes sells 1 trillion won a day, but it is a special case and usually sells about 100 billion units, so if about 50 billion comes in over the next three months, it will be in a position to defend the stock price. So, I think this share buyback has had the biggest impact on the rise.

[Anchor]
In recent years, haven't foreign investors been selling quite a lot? In the case of Samsung Electronics, foreign investors continue to sell, so why is this?

[Yum Seung Hwan]
First of all, there are many reasons, but the biggest reason now is that after Trump became the president-elect, this is uncertain. As we have experienced during the first Trump period, tariffs are imposed not only on China, but also on the world, including Korea, if we impose universal tariffs and 10-20% tariffs, there are quite a few semiconductors made in Korea and exported to the United States, which can create some tariff burden.

There is also concern that the money invested in the U.S. will not be recovered in the end as Trump publicly expressed his position that he would not pay subsidies by abolishing the law, and compared it to SX Hynix a lot. He uses the term memory semiconductor and HBM related to AI to Nvidia, but the high-bandwidth memory chip supplies Hynix, but Samsung Electronics is not yet clear.

Some say they supplied it and others say they did not, but what is clear is that Samsung Electronics has not been able to supply it until now in the process of Hynix's almost exclusive supply. So, I think foreign investors had no choice but to look at Samsung Electronics a little uncomfortable with the technological competitiveness that was a little behind their competitors. These things accumulated together, which is interpreted as a very aggressive sale.

[Anchor]
There were also large share buybacks in 2015 and 2017. But the current situation is different from then?

[Yum Seung Hwan]
First of all, the scale itself is very big this time. It's 3 trillion won for 3 months for a year, but it's very big because it's 10 trillion won for a year in total. I looked into the purchase of treasury stocks from 2014 to 2017. At that time, the public announcement said that they had purchased treasury stocks about 9 times and once purchased treasury stocks worth a total of 18 trillion won, but the stock price rose considerably at that time. But at that time, the semiconductor business was actually good.

But now, there is a lot of uncertainty about the semiconductor industry. In the second Trump period, since exports could be reduced, there is a common aspect of defense through treasury stock purchases, but the semiconductor economy was quite good until the first half of this year. Will the semiconductor business, which is currently in the second half of the year, be able to revive next year?

We haven't experienced it yet, when will it survive, there is no clear signal about it, and how Trump's 2nd stage will unfold. Those parts are clearly different from the past, so in that sense, we will definitely go up because we did this like we did then. Rather than thinking like this, we will announce our performance every quarter in the future, and we expect the stock price to show some volatility based on the performance and business conditions announced.

[Anchor]
Now, Samsung Electronics is going to buy 10 trillion won worth of treasury stocks, so wouldn't there be that amount of money in the bank account? How are you going to raise the funds?

[Yum Seung Hwan]
First of all, if you look at the financial statements, there are many subsidiaries of Samsung Electronics. That's why I'm connecting. So, as of the end of the third quarter, Samsung Electronics has 43 trillion won in cash equivalents and 60 trillion won in current financial products, so this combined is almost 100 trillion won. It's not that I don't have money. Then, we have to invest a lot in this in the future, but they worried a lot about that.

They are also concerned that if Samsung buys its own shares with the money it has to invest, it will be less competitive. But Samsung Electronics is one of the companies that invests more than anyone else. R&D also tends to do more compared to its competitor TSMC in terms of sales. So, you don't have to think that you invest less, but you tend to invest a lot. Anyway, some of the money you've earned so far has been so bad for defense and shareholder return purposes. Also, the government is doing value-up right now. Since it was carried out for that purpose, I don't think it's a situation to be very concerned about the cash part.

[Anchor]
I'm also concerned that buying treasury stocks may lead to a long-term rise in stock prices.

[Yum Seung Hwan]
But you have to look at it for the purpose of defending the stock price. This treasury stock purchase does not mean that the stock price will go back 80,000 electronics and 90,000 electronics. What is clear is that Samsung Electronics' competitiveness and performance should improve, but I think it will go again if one or two of the four are achieved. As I said before, the first one seems to have to supply a semiconductor called HBM to Nvidia like Hynix. It's also called a traditional semiconductor. Demand for semiconductors for PCs and mobile devices is not good.

There is a prediction that this will improve in the second half of next year, and consensus on that should be formed next year. And I think President-elect Trump will regulate China a little too much, but one of the burdens of Samsung Electronics these days is a Chinese competitor. A company called CXMT invests very aggressively. We're losing some of our share in China. However, if President-elect Trump heavily regulates China, Samsung Electronics can ease the burden in that regard. We're competing with TSMC in Taiwan. However, one of Samsung's disadvantages is that it lacks large customers.

There are companies like TSMC and Apple, but Samsung Electronics lacks large customers, so securing one or two of the four things I just mentioned can go up once again if there is a consensus in the market, but if not, there is a possibility that it will be a little frustrating at the stock price level.

[Anchor]
This time, let's also talk about bitcoin. After Trump's election, the price of Bitcoin, which was originally a little slow, could exceed almost $100,000 and reach $200,000. Or there could be further adjustments, there are a number of these mixed prospects, what do you think?

[Yum Seung Hwan]
Since it has risen so much in the short term, there are some changes in it recently, but now he himself mentioned that he would create a Bitcoin empire.

[Anchor]
He also told me that he has Ethereum.

[Yum Seung Hwan]
So I think it will ease regulations very aggressively. Then one of the risks of cryptocurrency is regulation. Expectations are high for now because the president, who actively lifts these regulations, was elected. Bitcoin has been called a half-life, so the supply is continuously reduced. So in the end, demand is important, but now that a president like this has come out, should I invest in Bitcoin from the standpoint of those who have been watching Bitcoin?

I can change my psychology here. So I'm going to $200,000, there's no way I know about that, but I think the positive part will be reflected anyway because the president was elected who can deregulate Bitcoin quite a bit, which is different from the past.

[Anchor]
Besides Bitcoin, some altcoins are also showing a little upward trend. In particular, some altcoins soared as Trump announced his pledge to dismiss SEC Commissioner Gary Gensler this time. How do you see it?

[Yum Seung Hwan]
So Gary Gensler, chairman of the stock exchange here, didn't make very strong remarks on bitcoin or something like that, but Altcoin made a lot of regulatory remarks. However, since he said he would be dismissed as soon as he was elected, it is inevitable for those who have invested in altcoins. That's why some people are predicting that the price of altcoins will rise more than Bitcoin.

Anyway, since altcoins are an improved cryptocurrency with Bitcoin, it would be nice to consider them as different types of currencies, but many people only know bitcoin, but there are actually a lot. We usually call various coins altcoins, but dismissing the chairman of the stock exchange, who regulated them, anyway, can be reflected in altcoins prices quite positively.

[Anchor]
Recently, there have been a lot of bitcoin and altcoin articles, and some people say that they will break their deposits and move on to virtual currency. What can I say that I need to be careful about after seeing those people?

[Yum Seung Hwan]
In fact, negative bank accounts for household credit loans amounted to 752.2 billion won, but they said they surged compared to last month.

[Anchor]
You're doing that to invest, right?

[Yum Seung-hwan]
Yes, but most of the news says that it seems like it has gone toward cryptocurrency. I searched the article once more, and the article came out three years ago, and there was another similar article. You will all remember that there was a craze for bitcoin once. After that, the results were pretty bad. Of course, it's different then and now. Also, since we have a Trump-elect, it's different, but it always breaks if it's too much, so I think you need to look at those things a little coldly instead of getting too excited now.

[Anchor]
We looked at domestic and foreign stock markets such as Samsung Electronics and virtual currencies. I was with Yang Seung-hwan, director of LS Securities. Thank you.