South Korea confronts underpriced stock market, but shirks chaebol reform



Analysis South Korea confronts underpriced stock market, but shirks chaebol reform Seoul is relying on voluntary measures to tackle Korea Discount, even as weak corporate governance plagues investors John LeeAugust 9, 2024 SHARE COPY LINK FACEBOOK X LINKEDIN MASTODON South Korean President Yoon Suk-yeol (fourth from left) eats tteokbokki with corporate leaders at a market in Busan. From left to right: SK Group Executive Vice Chairman Chey Jae-won, Samsung Electronics Chairman Lee Jae-yong, Hyosung Group Chairman Cho Hyun-joon, President Yoon Suk-yeol, LG Group Chairman Koo Kwang-mo, Hanwha Group Vice Chairman Kim Dong-kwan and HD Hyundai Group Vice Chairman Chung Ki-sun. Dec. 6, 2023 \| Image: ROK Presidential Office The head of South Korea’s Financial Supervisory Service (FSS) convened a meeting with the heads of 23 asset management firms on Thursday to tackle the so-called Korea Discount, a phenomenon in which South Korean stocks are undervalued relative to global peers. The issue has drawn increasing concern from domestic and international investors, and at the heart of such undervaluations is a deep-rooted problem: the poor corporate governance practices that are especially prevalent among the country’s family-controlled conglomerates, known as chaebol. The meeting spotlights the government’s recognition of this problem and its impact on market valuations. But the approaches discussed © Korea Risk Group. All rights reserved. No part of this content may be reproduced, distributed, or used for commercial purposes without prior written permission from Korea Risk Group. LATEST ANALYSIS 01Lee-Zelensky feud exposes South Korea’s widening Ukraine policy dilemma 02Lee Jae Myung’s ‘pacemaker’ strategy tests South Korea’s leverage with Trump 03Trump’s Korea investment victory lap masks safeguards Seoul still controls 04North Korean POW dispute tests Seoul-Kyiv trust and future Ukraine policy 05South Korea’s CPTPP push exposes the cost of turning trade gains into consensus 06AI storage boom gives South Korea battery makers an EV overcapacity lifeline 07South Korea’s Mexico strategy runs into the hard limits of USMCA politics 08Preschool test ban forces South Korea’s English hagwons to rethink placement

Analysis

South Korea confronts underpriced stock market, but shirks chaebol reform

Seoul is relying on voluntary measures to tackle Korea Discount, even as weak corporate governance plagues investors

John LeeAugust 9, 2024

South Korea confronts underpriced stock market, but shirks chaebol reform

South Korean President Yoon Suk-yeol (fourth from left) eats tteokbokki with corporate leaders at a market in Busan. From left to right: SK Group Executive Vice Chairman Chey Jae-won, Samsung Electronics Chairman Lee Jae-yong, Hyosung Group Chairman Cho Hyun-joon, President Yoon Suk-yeol, LG Group Chairman Koo Kwang-mo, Hanwha Group Vice Chairman Kim Dong-kwan and HD Hyundai Group Vice Chairman Chung Ki-sun. Dec. 6, 2023 | Image: ROK Presidential Office

The head of South Korea’s Financial Supervisory Service (FSS) convened a meeting with the heads of 23 asset management firms on Thursday to tackle the so-called Korea Discount, a phenomenon in which South Korean stocks are undervalued relative to global peers.

The issue has drawn increasing concern from domestic and international investors, and at the heart of such undervaluations is a deep-rooted problem: the poor corporate governance practices that are especially prevalent among the country’s family-controlled conglomerates, known as chaebol.

The meeting spotlights the government’s recognition of this problem and its impact on market valuations.

But the approaches discussed

South Korea confronts underpriced stock market, but shirks chaebol reform

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John Lee