Two of the major automobile companies in the world, Kia Motors Corp. and Hyundai Motor Co., both are expected to face tough times in near future. Not only that both the companies forecasted their weakest sales growth in the last 7 years, but, because of the surge of Won, the major South Korean currency, the investors are speculating that profits will be even lower than the forecast. As a result, both the companies experience decrease in share prices.
In the Korea Exchange, Hyundai Motor registered its biggest loss of 4.6% since 5th November. Hyundai Motor shares are currently priced at 206000 Won per share. On the other hand, Kia Motors also experienced decline of 3% in the share prices. Currently, each of the Kia Motors shares is priced at 54600 Won. In fact, the ill fate was experienced by most of the auto-related companies registered in the MSCI Emerging Markets Index. Out of 10 worst performing companies, 8 were auto related ones in the MSCI Emerging Markets Index.
In 2013, Hyundai and Kia combined are expected to register sales increase of 4.1% and the sales figure is expected to reach 7.41 million vehicles. The forecast was announced by the Chairman of both the companies, Chung Mong Koo. This marks the lowest combined growth for the two companies since 2006. Many of the cars produced are exported to foreign countries and as Won has strengthened by a great margin marking its 16th month high figure, the repatriated earnings are expected to get cut short as well.
Park In Woo, the LIG Investment & Securities Co.’s Analyst, stated that, as Won prices are on an increasing note, the investors are concerned that it may have a negative impact over the automobile stocks. In addition, as the outlook of both Kia Motors and Hyundai Motors seemed conservative, the foreign investors are also pretty much disappointed.
Coming to the other auto company stocks in the index, the largest auto parts maker in South Korea, Hyundai Mobis experienced a decline of 5.4% in the share prices. On the other hand, Hyundai Wia Corp. saw its share prices plummeting by 3.9%. When it comes to the logistics unit of the Hyundai Motor Group, Hyundai Glovis Co. also registered high losses as the shares declined by 6.6%. Hankook Tire Co. also experienced slump of 6.1%.