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Preferred stocks stay bullish amid high market volatility

All News 10:17 February 17, 2020

SEOUL, Feb. 17 (Yonhap) -- The prices of South Korea's preferred stocks have remained bullish this year despite greater market volatility due to the new coronavirus scare, data showed Monday.

The price index for preferred shares of the top 20 market-cap companies had climbed 9.11 percent this year as of Friday, according to the data from the Korea Exchange.

The figure far outperforms the 2.09 percent gain in the benchmark Korea Composite Stock Price Index (KOSPI) and the 3.15 percent rise in the KOSPI 200 index over the cited period.

Of the 20 companies, 15 saw the prices of their preferred stocks increase at a faster clip than those of common shares.

Preferred stocks stay bullish amid high market volatility - 1

The preferred shares of Samsung SDI Co., a major electric vehicle (EV) battery maker in South Korea, posted the biggest price growth, surging 80.4 percent, with prices of its common stocks rising 42.8 percent.

The preferred stocks of top-cap Samsung Electronics Co. increased 16.1 percent during the period, compared with a 10.8 percent hike in its common share prices.

The strong performance of preferred stocks was attributed mainly to their high dividend rates. The prices of preferred shares are usually lower than those of common stocks due to the lack of voting rights, but holders can bask in higher dividends.

The average dividend rate for the preferred shares of 11 firms that had announced dividend policies as of Friday was 2.9 percent, compared with the median 1.7 percent rate for their common shares.

A market analyst said the COVID-19 virus outbreak has reduced investors' risk appetite amid downgraded corporate earnings outlooks, forcing them to seek stable sources of income.

As of early Monday, South Korea had reported a total of 30 confirmed cases of the novel virus, with seven patients released from quarantine after making full recoveries.
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