Samsung Stock Reaches Record Highs

on Nov 23, 2012

Shares in Samsung (KS:005930) reached record highs in today’s trading session in Seoul, buoyed by credit rating agency Fitch’s downgrade of Japanese rivals Panasonic (TYO:6752) and Sony (TYO:6758).

**Samsung’s Stock**
The stock value of Samsung has risen by 36 percent this year valuing the Korean tech giant at around $195 billion (£122 billion). Today the share price closed at 1,437,000 Korean won or up 1.41 percent from yesterday.
“Samsung will benefit from the crumbling of its Japanese rivals,” Kim Hyung Sik, an analyst at Taurus Investment & Securities Co., wrote in a report. “On top of smartphone sales, Samsung is also boosting its market share with tablet computers.”

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Apart from its rivals’ mishaps, Samsung also scored a small victory against Apple in their ongoing litigation war. A US Judge in San Jose, California ordered the iPhone maker to disclose to the Korean company details of their recent settlement with HTC. The judge was convinced by Samsung’s fleet of lawyers that the license agreement between Apple and HTC might prove the American company has not suffered “irreparable harm” from the infringements of its patents – a necessary legal argument on which Apple relies to have any hope of obtaining an injunction on the sale of Samsung’s products in the US.

Earlier this year Samsung had to pay out $1.05 billion (£658 million) in damages after Apple won a patent-infringement lawsuit. The litigation war continues across multiple continents.
**Fitch Downgrades Panasonic and Sony to Junk Status**
!m[As Fitch Downgrades Panasonic and Sony, Investors Flock to Korean Rival](/uploads/story/884/thumbs/pic1_inline.png)In Fitch’s latest corporate credit rating reports Panasonic’s rating was reduced by two notches from BB to BBB-minus due to weakened competitiveness in the display panels and TVs business as well as ailing cash flow. On Thursday morning the downgrade resulted in widening Panasonic’s five-year credit default swaps (CDS) by 15 basis points to 295/315 basis points.

Sony’s debt was also downgraded by Fitch from BBB-minus to BB-minus due to the slow pace at which the company is expected to recover from this year’s losses. The downgrade comes just as Sony announced last week it plans to raise $1.82 billion (£1.14 billion) through the sale of convertible bonds. The company’s five-year CDS widened by 5 basis points to 382.5/402.5 basis points.

According to some analysts, Fitch’s reports often come out overly negative meaning the recent downgrades of Panasonic and Sony might have been too severe. Standard & Poor has maintained its BBB rating for both of the electronics manufacturers, while Moody’s has given them Baa3, the lowest of the high-grade category. Institutional investors, the ones that hold most of Panasonic and Sony’s debt, usually go by S&P and Moody’s credit ratings and analysts do not expect them to reduce their holdings of the companies’ debt.
“The big question is whether other rating agencies will follow Fitch,” said Mana Nakazora, chief credit analyst at BNP Paribas in Tokyo, as quoted by the Financial Times. Ms Nakazora also added that R&I, the biggest Japanese credit rating agency, still rates both companies in the single A range.


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