The federal government has initiated structural reform of the Korean inventory market. A analysis challenge commissioned by the Korea Change for restructuring the inventory market system is anticipated to be accomplished early subsequent yr, with inventory market restructuring work anticipated to start as early as the primary half of the yr. Analysts counsel that the mixture of the Lee Jae Myung administration’s shareholder-friendly insurance policies and Korean inventory market structural enhancements will speed up the decision of the Korea Low cost (undervaluation of home shares).
In response to the monetary funding trade on Dec. 3, outcomes from a analysis challenge commissioned by the Korea Change for restructuring the KOSPI, KOSDAQ, and KONEX methods will likely be launched early subsequent yr. The Korea Change plans to start overhauling the inventory market system as early as the primary half of subsequent yr based mostly on the analysis leads to session with monetary authorities. Whereas this analysis initially centered on revitalizing the KONEX market, the scope was reportedly expanded based mostly on the judgment that every one three markets’ competitiveness wanted strengthening. An nameless official mentioned, “We’re inspecting the general restructuring of the KOSPI, KOSDAQ, and KONEX market buildings, and the analysis challenge is in its last levels,” including, “The analysis challenge outcomes will likely be finalized early subsequent yr.”
The analysis challenge’s core goal is to investigate abroad inventory market methods, derive implications, and apply them to home inventory market restructuring. Abroad circumstances underneath evaluation embrace Japan and the UK. The market considers Japan’s case almost definitely to be utilized. The federal government’s intention to restructure the present three-market system is to mitigate focus in particular markets whereas enhancing every market’s competitiveness to increase international investor influx and improve the Korean market’s funding attraction. Revitalizing the capital market by means of ‘inventory market restructuring’ work that considers corporations’ progress stage traits is without doubt one of the new authorities’s nationwide agenda gadgets.
Japan has centered on attracting each home and abroad capital by means of qualitative progress ensuing from inventory market structural enhancements. In 2022, the Tokyo Inventory Change restructured its present 5 markets into three markets—Prime, Normal, and Progress—tailor-made to investor traits, whereas strengthening company governance necessities and new itemizing and itemizing upkeep requirements. The Prime market, the highest-tier market concentrating on world traders, applies extra stringent upkeep requirements and company governance necessities. To keep up itemizing on the Prime market, corporations should meet situations together with a free-float market capitalization of 10 billion yen (roughly 94.3 billion gained) or extra, a free-float ratio of 35% or extra, and a majority of unbiased exterior administrators on the board. The Normal market minimized unwanted side effects of focus in particular markets by strengthening its character as a home market concentrating on home traders (free-float market capitalization of 1 billion yen or extra, free-float ratio of 25% or extra). In response to the Korea Enterprises Federation’s report “Japan’s Inventory Market Reorganization Technique and Implications,” the variety of corporations listed on the first-tier market earlier than the market reorganization (April 1, 2022) was 2,177, however Prime market listed corporations decreased to 1,652 as of April 1 final yr.
In Korea, the focus phenomenon towards the KOSPI market, the place large-cap shares are concentrated, is cited as one of many pressing causes for inventory market system restructuring. Over the current six months (June 2 to Dec. 2 this yr), foreigners internet bought 7.1353 trillion gained value of shares within the KOSPI market, whereas solely buying 438.9 billion gained value within the KOSDAQ market. The KOSDAQ market, which branded itself because the Korean NASDAQ, has struggled to achieve momentum as a result of absence of blue-chip listed corporations and extreme volatility in some shares. As an alternative, circumstances of transferring listings to KOSPI when corporations develop bigger proceed unabated.
The KOSPI market’s day by day common buying and selling worth elevated by roughly 61% in comparison with a yr in the past, whereas the KOSDAQ market elevated by solely roughly 38%. The KONEX market ambiance is much more gloomy. The full variety of corporations that utilized for brand new KONEX listings this yr was three, down from the identical interval final yr (5 corporations).
