South Korea’s special prosecutor’s office finally revealed the result of its investigation into the bribery scandal yesterday. It was looking into allegations of bribes being paid indirectly to President Park Geun-hye to win the government’s influence. Samsung is alleged to have paid $37 million in bribes so that the government would back a merger between two of its affiliates. The prosecutor’s office concluded in the report that Samsung did pay bribes for this purpose through Choi Soon-sil, a close friend of the president who has now been impeached.
These are uncertain times for the company. Samsung Electronics vice chairman and the conglomerate’s heir Lee Jae-yong was arrested a couple of weeks ago on several charges including bribery. His trial begins soon after he was formally indicted last week. However, the company’s investors appear unfazed.
Despite these concerning developments, investors continue to push Samsung Electronics stock to new highs. Even if there has been a retracement in the stock over the past few weeks over concerns about leadership, buyers have swooped in and picked up the stock at what they probably perceive to be a discounted valuation and these fresh positions have helped push the stock to record highs.
With Lee Jae-yong’s trial a couple of days away, Samsung Electronics shares hit an all-time high today of 2,015,000 Korean won or $1752. The stock has never been higher and it goes to show that investors have not lost faith in the health of the company’s business and with 2017 set to be the year of Samsung, perhaps they feel that’s enough to absorb the impact from any changes at the very top.
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