Hyundai Motor Corp’s share price has fallen from a high of $80.75 since August 2014. The reason appears to be a reaction by investors to the agreement by Hyundai to purchase raw land in the Gangnam region of Seoul, South Korea.
The $10 billion US purchase price, for a parcel of land, sets a new high for real estate prices in South Korea. Hyundai will use the land for the construction of a new world headquarters, including hotels and a theme park.
Investors have determined the purchase price to be wildly excessive, even according to Asian standards. Furthermore, many have taken issue with the secret terms of the bidding and a deemed failure by the Hyundai CEO to consult with the board of directors on the bid.
Shares of Hyundai Motor have been punished ex-news release and are now down by more than 36% from the August 2014 all-time high.
The market capitalization decline of more than $12.5 billion US assumes the $10 billon purchase to, effectively, be valueless. This is clearly not the case.
The global large cap portfolio will now be adding shares of Hyundai to the portfolio.
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