Small Shareholders Raising Their Voices... A Boon for Stock Prices?

Demanding Shareholder Return Policies and Actively Expressing Opinions
SM Hits Record High the Day After the General Meeting
SK Chemical Also Rises for Three Consecutive Trading Days

[Asia Economy Reporter Myunghwan Lee] The appearance of shareholder meetings has changed. Minority shareholders have shed the stigma of being 'rubber stamps' and actively voiced their opinions by attending shareholder meetings in person to demand shareholder return policies. The management side also announced shareholder return measures such as dividend increases and share buybacks, taking steps to prepare shareholder return plans.

A representative example is SM Entertainment's shareholder meeting on March 31, which attracted attention due to the vote battle between the largest shareholder, Chief Producer Lee Soo-man, and minority shareholders. Minority shareholders have claimed that SM damaged shareholder value by funneling work to Like Planning, a personal company of Lee Soo-man, the largest shareholder. At this meeting, an auditor appointed by the activist private equity fund (PEF) Align Partners was appointed, marking a victory for minority shareholders. SM also decided to implement its first-ever dividend since its founding. SM's stock price rose to a record high of 90,000 won during trading on April 1, the day after the shareholder meeting.

At SK Chemicals' shareholder meeting on March 28, shareholders continued to demand dividend increases and other measures. Anda Asset Management requested SK Chemicals to increase dividends and improve governance to enhance shareholder value. Some minority shareholders proposed shareholder returns after the company sells its stake in SK Bioscience. SK Chemicals confirmed a dividend amount of approximately 58.7 billion won at the meeting. SK Chemicals' stock price also rose for three consecutive trading days after the shareholder meeting.

The securities industry analyzed that shareholder proposals to listed companies are on the rise. Suhyun Kim, a researcher at Shinhan Financial Investment, reviewed on the 26th, "There were more active shareholder proposals than ever before, and we could see responses from some companies accordingly." The main contents of shareholder proposals included the appointment of directors and audit committee members, expansion of cash dividends, share buybacks, and cancellations.

There is also an analysis that stocks with high governance scores among ESG (Environmental, Social, Governance) factors show higher returns from the perspective of shareholder returns. Jungbin Lee, a researcher at Shinhan Financial Investment, said, "Due to macro uncertainties, governance portfolios with relatively value stock and dividend stock characteristics have performed well," adding, "With increased market volatility, there is a higher preference for low-volatility stocks with high dividend yields and relatively low price volatility." Top governance stocks include KB Financial Group, Shinhan Financial Group, DGB Financial Group, SK Innovation, and SK Hynix.

There is also advice to pay attention to high-dividend stocks. More than half of high-dividend stocks are financial stocks, and due to the Federal Reserve's hawkish interest rate hike stance, it is analyzed that dividend stocks and financial stocks will continue to rise.