By Kwanwoo Jun


Shares in Samsung Electronics rose sharply as investors cheered the South Korean technology giant's plan to buy back more than $7 billion of shares to boost shareholder returns.

The stock jumped as much as 7.5% early Monday after Samsung said late Friday that it will repurchase 10 trillion won of shares, equivalent to $7.17 billion, in stages over the coming 12 months to help enhance shareholder value.

The rally in the index heavyweight, whose market capitalization accounts for about 17% of the country's main market, helped drive the benchmark Kospi more than 2% higher.

"The 10-trillion-won share buyback is expected to serve as an opportunity for a short-term rise in Samsung Electronics stock prices," KB Securities analyst Jeff Kim said in a note Monday.

Samsung said that of the total, 3 trillion won of shares--in the form of 50.14 million common stocks and 6.91 million preferred stocks--will be repurchased from the market from Monday and cancelled until Feb. 17, 2025. It said its board will decide on the remaining 7 trillion won of shares later.

Kim of KB Securities said that Samsung might need more than just the share buyback to sustain its stock's upward momentum for a longer period.

"The share-price momentum in the mid- and long-term should come with Samsung's early high-end market entry by securing leadership in high bandwidth memory 4 products next year and a clear inventory decrease for such general-purpose memory chips as double data rate4 and DDR5 products," Kim said.

Samsung's stock had slumped earlier this year amid investor concerns over its flagship memory-chip business, which is missing out on the artificial-intelligence boom. Shares in its AI chip-making rivals, such as SK Hynix, Micron Technology and Taiwan Semiconductor Manufacturing have gained strongly.

Despite its Monday rally, the stock remains about 27% lower year to date.


Write to Kwanwoo Jun at kwanwoo.jun@wsj.com


(END) Dow Jones Newswires

11-17-24 2204ET