Seoul, Monday, March 4, 2024 – South Korea’s financial regulator unveiled a package of measures today aimed at bolstering its domestic stock market and addressing the persistent “Korea discount.” This phenomenon refers to the tendency for South Korean companies to trade at lower valuations compared to their global counterparts. 1
The full press release can be seen here.
The “Corporate Value-up Programme” seeks to encourage listed companies to prioritize shareholder returns through various incentives.
This includes the introduction of an index highlighting firms with strong shareholder value and the potential consideration of tax benefits for companies that enhance their market value and increase shareholder returns. Additionally, the program encourages companies to voluntarily disclose detailed plans for boosting their valuations.
The Korean government hopes that these measures will incentivize companies to focus on long-term growth strategies and improve corporate governance. Ultimately, they aim to narrow the valuation gap between South Korean companies and their global peers, making the Korean stock market more attractive to foreign investors.
The effectiveness of these reforms remains to be seen.
Some analysts have expressed concern that the proposals lack mandatory elements and may not be forceful enough to achieve significant change.
However, the initiative represents a noteworthy step by the South Korean government to address a longstanding challenge in its financial markets.
- Stock Market: https://www.cnbc.com/2024/02/26/south-korea-unveils-measures-to-boost-stock-markets-tackle-korea-discount.html[↩]
