The shares of Korean blue chips with significant foreign investment, such as Samsung Electronics, POSCO and Hyundai Motor, will be the first of many stocks to be hit by the tapering of U.S. quantitative easing, analysts projected.

They will also be affected by Japan’s continued monetary stimulus, part of the so-called “Abenomics” aimed at reviving its economy that has led to the depreciation of the yen, the analysts said.

“A psychological effect might drive foreign sell-offs and capital outflow once the stimulus cuts commence in the U.S.,” said Lee Young-won, a senior researcher for HMC Investment Securities.

“Foreign unloading may occur not only in value sectors but evenly among shares, including the ones with high foreign ownership such as Samsung Electronics, first to be vulnerable to QE tapering.”

Samsung Electronics, the most liquid stock with foreign investors holding about a 50 percent stake, has been facing increased volatility. Its shares have been driven mostly by investor sentiment undermined by the expected phaseout of U.S. quantitative easing, despite Samsung’s lucrative earnings in mobile devices and chips.

Shares of Samsung Electronics, Korea’s largest company, have a 52-week high of 1,584,000 won and low of 1,209,000 won.

Analysts said that although Korea, which has sound fundamentals, would be relatively less affected than other emerging markets such as India and Brazil, Asia’s fourth-largest economy will need to brace for the inevitable tapering in the U.S.

The minutes of the Federal Open Market Committee for the Oct. 29-30 meeting showed that policymakers generally agreed that improved outlook for the labor market would “warrant trimming the pace of purchases in coming months.”

The change in U.S. monetary policy could spell trouble for the Korean market, said Lee Sang-won, an equity strategist at Hyundai Securities.

“U.S. shares, especially, have moved upward in tandem with the implementation of monetary stimulus,” Lee said.

“However, tapering means scaling back the pace of its asset purchases, not (monetary) tightening.”

Tapering would also point to recovery in the world’s largest economy, which would raise expectations for and retrigger interest in Korean shares and bonds.

“We’ll continue to see a cyclical movement like when Korea saw a capital outflow in May-August and an inflow in September-October,” said Lee of HMC Investment, adding that Korean listed companies will regain attention from investors as the U.S. economy recovers.

By Park Hyong-ki (hkp@heraldcorp.com)