Expectations of further weak earnings from Korea’s blue-chip companies beset by a strong won are likely to send another shock to the stock market, analysts said.

Samsung Electronics kicked off the earnings season, reporting an estimated 6 percent on-year drop of its operating profit at 8.3 trillion won ($7.8 billion) in the fourth quarter of last year, well below the market prediction of over 9 trillion won.

Institutional and foreign investors had been unloading their shares ahead of the tech giant’s earnings guidance Tuesday, as investment banks issued negative projections for not only Samsung but also other major exporters including Hyundai Motor in part due to the yen’s depreciation.

“Weak sales of premium (Samsung Electronics’) smartphones and poor performance of its organic light-emitting diodes led to the drop in profit,” said Kim Young-woo, an analyst at HMC Investment Securities.

Samsung Electronics closed at 1,304,000 won, down 0.23 percent, despite gains in the broader market where the benchmark KOSPI climbed 0.32 percent to 1,959.44.

The market quickly reflected the earnings shock at Korea’s largest company as analysts projected a loss of some 800 billion won after taking a quarterly drop of 50 won in the won-dollar exchange into account.

Given that Samsung had few defensive measures against the won’s strength in the fourth quarter as it focused more on cost-cutting to improve competitiveness, a profit loss seemed inevitable.

Samsung further faces increased competition from Apple in the first half of this year as the U.S. tech company is gearing up to launch a bigger smartphone.

“Apple’s larger iPhone 6, which could affect sales of Samsung Galaxy S4 in the second quarter, would be at stake,” said Lee Seung-woo, an analyst at IBK Securities.

This month, brokerages from both home and abroad started slashing their earnings outlooks for Samsung, with foreign analysts suggesting 8 trillion won as the likely figure, compared to the rosier 9 trillion won from their Korean counterparts.

Earlier, they had expected Samsung to earn at least 10 trillion won in terms of operating profit.

The downgrade rally came as Samsung Group’s electronics unit paid up to 3.2 trillion won of bonuses to its employees last year to commemorate the 20th anniversary of its so-called New Management Initiative.

Along with market saturation, the prolonged patent battle with Apple Inc. was seen as a potential major drag on Samsung’s earnings.

The Korean won’s rise against the U.S. dollar also dented Samsung’s earnings as it made South Korean goods less price-competitive in overseas markets.

Despite challenges from home and abroad, Strategy Analytics said Tuesday that Samsung was expected to maintain its standing as the world’s largest smartphone maker by selling nearly 400 million units worldwide this year.

Official quarterly earnings figures will come later this month.

Other bluechips also appeared to be unlikely to fare better, with Hyundai Motor expected to trigger volatile trading in the market as analysts projected a strong won to affect the auto giant and its affiliates such as Kia Motors.

Shares of Hyundai Motor, Samsung Electronics, Kia and Hyundai Mobis together account for about 27 percent of stock market capitalization.

Although analysts said that the market may be overreacting to the exchange fluctuations, Hyundai Motor would need to introduce new product lineups to offset expected losses in the short term.

Hyundai Motor closed at 229,000 won, up 0.22 percent on Tuesday.

By Shin Ji-hye (shinjh@heraldcorp.com)