Kim Juhyun Calls for Improving Corporate Value... "Introducing Corporate Value-Up Program"

Financial Services Commission-Financial Supervisory Service-Securities CEOs Meeting
Part of Asset Formation Policy Through Capital Markets
'Corporate Value-Up Program' to Enhance Listed Companies' Corporate Value
Request for Expanded Corporate Finance Role for Securities Firms
Reviving Stock Market Through Government Capital Market Tax Reform

Kim Ju-hyun, Chairman of the Financial Services Commission, and Lee Bok-hyun, Governor of the Financial Supervisory Service, are attending the 'Securities Industry CEO Meeting' held on the 24th at the Korea Financial Investment Association in Yeouido, Seoul. Photo by Kang Jin-hyung aymsdream@

The financial authorities are introducing a program to encourage improvements in corporate governance to resolve the undervaluation of the Korean stock market. The government plans to reform capital market taxation, including the abolition of the financial investment income tax (Fintax), while listed companies are expected to proactively enhance corporate value to increase shareholder value. Securities firms will strengthen their role as comprehensive corporate finance service providers to support the formation of national assets through the capital market.

On the 24th, at the 'Financial Services Commission-Financial Supervisory Service-Securities Industry Meeting' held at the Korea Financial Investment Association in Yeouido, Seoul, Kim Joo-hyun, Chairman of the Financial Services Commission, announced, "We plan to introduce a 'Corporate Value-Up Program' to encourage companies' efforts to enhance shareholder value."

The Corporate Value-Up Program is one of the policies included in the Financial Services Commission's work report. It is a measure to encourage the boards of listed companies to voluntarily analyze the reasons for their undervaluation and establish response strategies. The program includes publicly disclosing comparisons of key investment indicators of listed companies, such as price-to-book ratio (PBR) and return on equity (ROE), by market capitalization and industry, and recommending that companies communicate their corporate value improvement plans with shareholders. Additionally, an index and exchange-traded fund (ETF) composed of companies excelling in corporate value improvement will be introduced.

Chairman Kim explained, "'The Corporate Value-Up Program' encourages companies to analyze the reasons for their undervaluation themselves, develop response strategies, and actively explain these to investors." He added, "The government will cooperate with the Korea Exchange to create incentives that attract more capital to shareholder-friendly companies," emphasizing, "We will continuously monitor through the exchange until it leads to a substantial increase in corporate value."

Chairman Kim also stressed the importance of securities firms' roles in improving corporate value and supporting national asset formation. The government has been promoting institutional improvements to foster mega investment banks (IBs) since 2016. However, Kim pointed out that securities firms still focus heavily on brokerage and real estate-centered operations.

Kim stated, "Although our companies are growing into global enterprises, there is an assessment that the function as a 'comprehensive corporate finance service provider' is insufficient," adding, "the government will discuss institutional improvement measures with the securities industry to strengthen the corporate finance role of securities firms."

There is a reason Chairman Kim emphasized the 'Corporate Value-Up Program' and the corporate finance role of securities firms. The Financial Services Commission is focusing its policy direction this year on 'supporting national asset formation through the capital market.' The goal is to resolve the undervaluation factors of the Korean stock market through the roles of three main actors: the government (capital market tax reform), companies (corporate value improvement), and securities firms (strengthening corporate finance). As part of this, the Financial Services Commission announced capital market tax reform measures, including the abolition of the financial investment income tax and strengthening support for Individual Savings Accounts (ISA), during the presidential work report.

Meanwhile, the meeting was attended by 10 securities firms including KB Securities, NH Investment & Securities, Mirae Asset Securities, Samsung Securities, Korea Investment & Securities, DB Investment & Securities, Daishin Securities, Shin Young Securities, Morgan Stanley, and JP Morgan, as well as the Korea Exchange, the Listed Companies Association, and the KOSDAQ Association.