[Inside Chodong] Shareholder Returns: The Real Beginning Starts Now

Market Stirs Amid Historic Shareholder Return Announcements by Samsung Electronics and SK hynix

Samsung Electronics’ Shareholder Return Disappointment Triggers 8% Stock Drop

Shareholder Returns Must Not Remain One-Off Events

Sustainable Shareholder Returns Should Be Prioritized

Recently, the hottest topic in the domestic stock market has undoubtedly been shareholder returns. As market leaders Samsung Electronics and SK hynix announced unprecedented shareholder return initiatives, anticipation among investors soared long before the official announcements.

SK hynix unveiled a record-breaking plan to repurchase and retire its own shares worth 40 trillion won, while Samsung Electronics announced a shareholder return policy of up to 110 trillion won, including a 30 trillion won cash dividend in the third quarter alone.

Before the announcements, market expectations soared—with some speculating totals could reach as high as 300 trillion won. After the announcements, stock prices responded strongly based on individual valuations, significantly impacting the entire equity market. In particular, Samsung Electronics' stock price plunged more than 8% after its announcement due to disappointment, and this ripple effect caused even the KOSPI—which was on the verge of recovering the 7,000 mark—to fall sharply.

Unlike in the past, when investors reacted emotionally to the scale of these numbers, today’s market now rigorously scrutinizes the sustainability of shareholder returns. Investors have grown more discerning, prioritizing whether these returns will be maintained regularly and unwaveringly in the future, rather than just the one-time impact of impressive figures. Their judgements increasingly focus on whether such measures will continue to deliver real, ongoing benefits to shareholders.

In capital markets, shareholder returns do more than simply redistribute profit—they communicate a company’s strategy for future cash flow generation and capital allocation. One-off returns are often viewed by investors as temporary stock-boosting measures, but clear and predictable shareholder return policies attract long-term capital and provide solid support for stock price stability.

Moreover, it is only after ongoing repurchases and retirements of treasury shares accumulate over several years that the number of outstanding shares is meaningfully reduced, leading to a structural increase in per-share and shareholder value. According to Mirae Asset Securities' analysis, if SK hynix maintains its current return policy through 2030, the number of shares in circulation will decrease by about 28%, structurally raising annual earnings per share (EPS) by an average of 15.5%.

This trend of major companies prioritizing shareholder returns is beginning to spread throughout the market. For example, KCC recently announced that it would redistribute to its shareholders the dividends it received from Samsung C&T. This marks the start of a virtuous cycle in which the shareholder returns of large corporations are passed along the governance chain, enhancing the value of other listed companies.

The market, once fixated solely on growth, is now shifting its gaze toward shareholder returns. Taking lessons from the recent disappointment with Samsung Electronics’ announcement, more listed companies should establish sustainable shareholder return policies as a fundamental management principle. When the market moves beyond one-off announcements to embrace enduring return structures, the Korean stock market will finally be able to break free from the chronic undervaluation that has held it back, and enter a new phase of growth.

This content was produced with the assistance of AI translation services.