SEOUL, May 21 (Reuters) – Samsung Electronics’ shares rose as much as 6.5% in morning trade on Thursday after the tech giant and its South Korean union reached a tentative pay deal, potentially averting a strike that had threatened to hit the economy and undermine global chip supply chains.
The union said the planned 18-day strike by nearly 48,000 members would be suspended while the tentative 11th-hour deal is put to a vote between May 22 and 27.
The benchmark KOSPI was up 5.3% as of 0030 GMT.
Ryu Young-ho, a senior analyst at NH Investment & Securities, said investors were relieved that uncertainty surrounding the prospect of a strike had eased.
Still, Ryu said the agreement was not entirely positive for investors as Samsung would likely need to set aside provisions tied to higher labour costs, which could weigh on operating profit.
The company’s proposal of paying performance bonuses in company stock rather than cash appeared to reflect Samsung management’s preference, as stock-based compensation could lower the immediate financial burden on the company, said Ryu.
The two sides had been at odds over how performance bonuses would be distributed between the conglomerate’s hugely profitable memory business and loss-making logic chip businesses, Reuters has previously reported.
(Reporting by Heekyong Yang, Heejin Kim and Cynthia Kim;Editing by Ed Davies)
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