Investors are watching whether the three Hyundai Motor (005380) Group affiliates that have shed more than 100 trillion won in combined market value over three months can rebound on the back of a stronger yen. Their shares have corrected sharply as expectations for robotics and physical artificial intelligence cooled, and analysts say the yen's appreciation could work in their favor in price competition with Japanese automakers.
The combined market capitalization of Hyundai Motor, Kia (000270) and Hyundai Mobis (012330) fell to 155.7496 trillion won on the 17th from 255.9413 trillion won on June 15, a drop of 100.1917 trillion won, or 39.1%, according to the Korea Exchange. Hyundai Motor declined 43.9%, while Hyundai Mobis and Kia fell 40.5% and 27.8%, respectively.
The slide reflects the rapid unwinding of the growth premium that drove the stocks higher earlier this year. Hyundai Motor's 12-month forward price-to-earnings ratio climbed to 18 times in early June on hopes for its robotics business but has since fallen to about nine to 10 times. Accumulated losses, investment burdens and concerns over a delayed initial public offering, along with a stronger won and slowing global auto demand, also weighed on sentiment.
Analysts see the stronger yen as a new catalyst for a rebound. The dollar-yen rate dipped into the 152 range this month, putting the Japanese currency at its strongest level in about seven months, as expectations for further interest rate increases by the Bank of Japan were priced in. A stronger yen erodes the currency-driven price advantage that Japanese carmakers such as Toyota and Honda have enjoyed in overseas markets. In markets such as North America, where Korean and Japanese automakers compete fiercely, that could translate into improved relative price competitiveness for Hyundai Motor and Kia.
"In a range-bound stock market, a limited appreciation of the yen should have an impact on a rebound in auto shares," said Kang Hyun-ki, an analyst at DB Securities.
