Samsung Electronics, Alteogen among stocks hit by 'sell-on' wave despite positive news

Even the Kospi's top stock by market cap, Samsung Electronics, and the Kosdaq's top stock, Alteogen, have failed to escape a wave of "sell-on" pressure — a pattern in which share prices fall after major positive announcements rather than rising. The same trend has hit Doosan Fuel Cell and Samsung C&T. Analysts say that because expectations had already been building before the announcements, and with foreign and institutional buying weakening, the good news has become a cue for existing investors to take profits rather than a draw for new buyers.

According to Korea Exchange, Alteogen closed Thursday down 5.19 percent at 283,000 won ($208) from the previous session. The company had announced Wednesday that it signed an exclusive option and license agreement with global pharmaceutical company Novartis covering multiple biopharmaceuticals incorporating ALT-B4 — a deal worth up to $3.22 billion if all options are exercised and development and commercialization milestones are met. Despite the scale of the contract, the share price fell 0.83 percent on the day of the announcement and extended its losses the following day.

Similar patterns emerged elsewhere. Samsung C&T announced Thursday that it would join GE Vernova Hitachi Nuclear Energy as a co-EPC (engineering, procurement and construction) partner on a 1.2-gigawatt small modular reactor project led by Swedish nuclear firm Studsvik, yet its shares slipped 0.27 percent that day. Doosan Fuel Cell announced Wednesday that it had signed a 501.4 billion won supply contract with Hyaxiom for phosphoric acid fuel cells destined for AI data centers in the United States, but its shares tumbled 12.74 percent that day. The stock recovered only 0.78 percent Thursday, failing to recoup Wednesday's losses.

Samsung Electro-Mechanics disclosed Tuesday that it had signed a 1.07 trillion won supply contract with a major global company for multilayer ceramic capacitors for AI servers, yet its shares fell 1.92 percent that day. They then dropped a further 2.10 percent Wednesday and 3.71 percent Thursday, posting three consecutive sessions of losses after the disclosure. The deal is the largest long-term MLCC supply contract in the company's history.

The stocks that have recently experienced sell-on pressure had already been rising before their positive announcements. According to Korea Exchange, Doosan Fuel Cell surged 73.99 percent from Aug. 3 through just before its announcement. Over the same period, Alteogen and Samsung Electro-Mechanics gained 25.87 percent and 23.45 percent, respectively, while Samsung C&T rose 13.37 percent. Because share prices had already climbed sharply ahead of the news, analysts say the announcements simply gave investors an opportunity to lock in gains.

Heavy selling by foreign and institutional investors has also fueled the sell-on dynamic. From Aug. 3 through Thursday, foreign investors recorded net selling of 14.59 trillion won on the domestic market, while institutional investors posted net selling of 7.87 trillion won, bringing their combined net selling to 22.47 trillion won. Over just the past five trading sessions, foreign and institutional investors sold a net 4.22 trillion won and 4.62 trillion won, respectively, for a combined net selling total of 8.84 trillion won. With share prices already elevated ahead of the announcements, the buying power that might otherwise have pushed them higher has been absent.

Han Ji-young, a researcher at Kiwoom Securities, said the positive disclosures were fundamentally good news on their own merits, but that elevated pre-announcement expectations combined with diminished buying capacity from foreign and institutional investors had created conditions for existing holders to take profits rather than attracting new buyers.

Samsung Electronics, the Kospi's largest stock by market cap, had already experienced a similar pattern. After the market close on Aug. 21, the company announced plans to return between 90 trillion won and 110 trillion won to shareholders this year — fulfilling its existing policy of allocating 50 percent of free cash flow from 2024 to 2026 to shareholder returns, and representing the largest such program in South Korean corporate history. Yet on the next trading day, Aug. 24, the share price tumbled 8.7 percent. Analysts pointed to the same dynamic: shareholder return expectations had already been priced in before the announcement, and when the plan was finally unveiled, a wave of profit-taking selling followed.

Rising long-term US interest rates have also been cited as a backdrop to the recent sell-on trend. The yield on the 10-year US Treasury note has recently topped 4.8 percent during trading, sustaining elevated levels. When interest rates rise, the discount rate used to calculate the present value of future earnings also increases, putting pressure on growth stocks that have commanded high valuations. Given that many of the companies caught up in the recent sell-on wave are growth stocks, the rise in long-term rates is seen as an additional headwind.

Market analysts broadly view the recent sell-on phenomenon as the result of supply-demand conditions and external factors rather than any problem with individual companies' fundamentals. One analyst said the key question was whether the overall market environment — in terms of liquidity and valuation multiples — would recover enough for individual pieces of good news to be reflected normally in share prices again, adding that a further easing of the surge in long-term US yields and a pullback in oil prices would need to come first.