[SEOUL] Shares in South Korean tech giant Samsung Electronics hovered near record highs on Wednesday, fuelled by investors' expectations that strong sales of its chips and new smartphone line-up will hasten an earnings recovery.
The stock ended 0.4 per cent higher at 1.503 million won (US$1,335) after trading as high as 1.506 million won earlier in the day or about 5 per cent shy of the all-time intraday high of 1.584 million won set in January 2013.
The stock is also en route to its best quarterly performance in three years: it has gained more than 13 per cent in the current January-March quarter.
Underpinning the surge are expectations that the company's profit, which in 2014 fell for the first time in three years, will increase this year, thanks to strong demand for its chips as well as a positive reception for its new Galaxy S flagship devices. "Earnings are likely to head upwards; there's really nothing to knock the company for right now," said fund manager Park Jung-hoon at HDC Asset Management, which holds Samsung shares. Mr Park said the stock could rise to 1.6 million won.
Samsung's 2015 operating profit is expected to rise about 4 per cent from a year ago to 26 trillion won (US$23.10 billion), according to a Thomson Reuters I/B/E/S survey of 50 analysts.
Some brokerages raised smartphone shipment forecasts for Samsung this year on hopes the struggling mobile division will regain its footing.
The weaker South Korean won is also seen as helping exporters like Samsung. The currency's average value against the dollar is down about 3 per cent so far this quarter from a year ago following a 2.3 per cent decline in October-December.
Foreign investors on the hunt for higher returns following monetary policy easing around the world are also helping lift Samsung shares, with some analysts saying that Europeans have been the most active overseas buyers in recent weeks. "It's inevitable for money to flow into Samsung Electronics, which is the top stock in the local market," said IBK Securities analyst Lee Seung-woo.