Government Explains Limited Dollar Sales by Samsung Electronics and SK Hynix

The government has stated that the impact of shareholder returns by Samsung Electronics and SK Hynix on the won-dollar exchange rate is expected to be limited. Both companies are in a position to cover a significant portion of their shareholder return funds with Korean won, indicating that while some dollar sales are necessary, the entire funding structure does not rely on currency exchange. SK Hynix has announced a plan to buy back and retire shares worth 40 trillion won, while Samsung Electronics plans to return up to 110 trillion won to shareholders this year. When combined, the total shareholder returns of the two companies exceed 150 trillion won, which would require over 100 billion dollars if all were to be raised through dollar sales. However, the government explained that this calculation is far from the actual situation. In the foreign exchange market, when companies convert their held dollars into won, the supply of dollars increases, putting downward pressure on the exchange rate. However, if foreign shareholders convert won back into dollars, demand for dollar purchases arises. The foreign ownership ratios for Samsung Electronics and SK Hynix are 46.9% and 51.1%, respectively, exceeding the KOSPI foreign ownership ratio of 40.2%. This week, foreign dividend payments are expected to be around 1.2 billion dollars, and if the repatriation of dividends is concentrated, expectations for dollar sales and purchase demand may occur simultaneously.

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