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After the announcement of the large-scale investment plan, Posco’s share price continued to fall

After the announcement of the large-scale investment plan, Posco’s share price continued to fall
Issue Time:2018-09-25

Since South Korea's Posco has announced a large-scaleinvestment plan of 45 trillion won (about 40.3 billion US dollars) in earlySeptember, the company's share price has continued to fall. As concerns aboutpossible cuts in dividends have intensified, investors have sold Posco'sshares.


On September 18, Pohang Steel's stock price listed on theKorea Stock Exchange closed at 296,500 won, up 1.19% from September 17. Despitethe rebound, the stock price has fallen by 7.2% since it closed at 319,500 wonon September 3. Since September, Posco has sold more than 360 billion won worthof stock.


On September 3, Posco announced its 45 trillion woninvestment plan and 20,000 job plan, saying it will expand its steel andbattery capacity by 2023. The amount of investment announced this time isnearly 2.5 times that of Posco's investment in the past five years.According tothe investment plan, Posco will spend 9 trillion won (about 8 billion U.S.dollars) per year, and the market expects that Posco’s operating profit thisyear will be only 5.5 trillion won (about 4.894 billion U.S. dollars). 


In addition, the two unions recently organized by Posco havealso aggravated investor concerns. This steel manufacturer has not had a union for the past 50 years. Although the union is still at an early stage, industry insiders point out that Posco's labor relations will face tremendous changes and will affect business operations.


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