[Market Focus] BGF Surges Over 8% on Low PBR Highlighted Ahead of Presidential Election

On May 30, BGF showed strong performance in early trading. This was due to growing expectations for measures to boost the domestic stock market ahead of the presidential election.

As of 9:30 a.m. on this day, BGF was trading at 4,350 won, up 325 won (8.07%) from the previous trading day.

This is interpreted as a result of expectations for a revaluation of holding companies that have long remained undervalued, as each political party announced policies to boost the stock market ahead of the presidential election.

Lee Jaemyung, the presidential candidate of the Democratic Party of Korea, pledged to amend the Commercial Act to strengthen the duty of loyalty to shareholders, to promote cumulative voting for the appointment of directors, and to give priority allocation of new shares to existing parent company shareholders in the case of spin-off listings.

Kim Moonsoo, the candidate of the People Power Party, emphasized stock market support by pledging to hold overseas IR events as president, lower the highest rates of corporate and inheritance taxes, and reform the tax system for dividend income.

In this regard, Choi Gwansoon, a researcher at SK Securities, stated in a report on May 29, "During the process of boosting the domestic stock market, holding companies, which are a representative low PBR (price-to-book ratio) sector, are expected to benefit." He explained, "The main reasons for the undervaluation of holding companies are overlapping listings of subsidiaries, sluggish stock prices during succession processes, and passive cancellation of treasury shares."

As of last year, BGF's PBR stood at only 0.19 times.