2 weeks Ago By [email protected](KoreaTimes)
Kim Byoung-hwan, chief of the Financial Services Commission, speaks during a press conference at the Government Complex in Seoul, Wednesday. Yonhap Kim vows to draw up measures to better protect minority shareholders within this year By Jun Ji-hye Kim Byoung-hwan, chief of the Financial Services Commission, said on Wednesday that achievements of the Corporate Value-up Program should be evaluated over the long term amid growing disappointment in the government-led initiative. He noted during a press conference that there should be a wide variety of criteria to judge whether the policy has succeeded or failed, and from a stock price perspective, it is true that, overall, Korea is lagging behind other countries.
However, he highlighted that in the case of certain companies, particularly those that have announced their value-up plans, some received favorable evaluations in the market following their announcements. “We have observed a significant increase this year in shareholder return activities, such as share buybacks and cancellations,” Kim said. “I don’t believe the value-up initiative is a policy designed to achieve quick results.
I expect that if pursued consistently, its achievements will come to light gradually, sometimes visibly.” The Corporate Value-up Program aims to boost the value of local businesses and eliminate the so-called "Korea discount." But the Korea Value-up Index, which the government has promoted ambitiously, has shown little effect since it was unveiled on Sept.
24. Contrary to expectations that inclusion in the value-up index would lead to an uptrend, nearly half of the stocks included have seen a drop in price. In addition, around 70 percent of the included stocks have seen a decrease in trading volume, highlighting the program’s underperformance.
“While we humbly accept the current criticisms, I believe it’s also important not to make definitive negative assessments over a short period,” Kim said. He added that a value-up exchange-traded fund (ETF) tracking the Korea Value-up Index is set to be launched next month. "What I want to emphasize is that we, as the government, will carry out what we can do without delay and according to plan,” he said.
Read More Corporate Value-up Index falters, but investors remain optimistic Value-up Index sees stocks rise by 3% Value-up Index slammed for inconsistent stock selection Banking, telecom stocks suffer declines over exclusion from Value-up Index The country’s chief financial regulator shared the need to enhance the transparency of governance and decision-making processes of corporates in order to achieve a value-up. In particular, he cited cases criticized for neglecting the protection of minority shareholders, primarily during processes that bring financial changes, such as mergers and spinoffs, in which general shareholders are often relatively overlooked. “We are actively reviewing institutional improvements to better protect minority shareholders in mergers and spinoffs.
We plan to present a concrete proposal within this year,” Kim said. The comments came as the government is pushing to amend the Commercial Act and the Capital Markets Act to better protect minority shareholders. Finance Minister Choi Sang-mok stated the previous day during a National Assembly audit that while the details are still under discussion, the government intends to submit bills to amend those laws within this year.
With regard to the U.S. presidential election scheduled for Nov.
5, Kim called it “a very important risk,” underscoring that the country’s financial market as well as its industrial sector will face significant impacts depending on the results of the election. “Therefore, internally, we are assessing the potential impacts based on various scenarios and considering what measures might be possible at that time,” he said..
