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Shares of holding firms soar on planned passage of Commercial Act revision
The KOSPI index and the won-dollar exchange rate are displayed on an electronic board at Hana Bank’s headquarters in Seoul, Tuesday. Yonhap
By Jun Ji-hye
Shares of major conglomerate holding companies surged Tuesday amid growing investor optimism over the expected passage of a revision to the Commercial Act under the new administration, according to industry officials.
According to the Korea Exchange, shares of HS Hyosung on the country's main bourse, KOSPI, soared to 91,600 won ($68), marking a 29.93 percent increase from the previous day's close.
Shares of other conglomerate holding companies also posted strong gains.
Hanwha Corp. — the de facto holding company of Hanwha Group — jumped 15.38 percent to close at 108,800 won, while Lotte Corp. climbed 8.45 percent to 30,150 won.
The Commercial Act revision aims to expand corporate directors' fiduciary duties to include greater responsibility toward shareholders.
It was passed in the National Assembly on March 13 with the unilateral endorsement of the then-opposition Democratic Party of Korea (DPK), but was vetoed by then-acting President Han Duck-soo on April 1 and subsequently scrapped following another vote.
President Lee Jae Myung, elected on the DPK ticket, had pledged during his campaign to revive the revision, accelerating the legislative process after his inauguration on June 4. It gained further momentum after the opposition People Power Party (PPP), which had previously opposed the revision, shifted its stance and said it is "open to discussion."
Under the previous Yoon Suk Yeol administration, the then-ruling PPP had argued that the Commercial Act revision, designed to apply to all companies, could hinder corporate management. Instead, it had pushed to amend the Capital Markets Act so that such changes would apply only to listed firms.
With the PPP's change in position, the Commercial Act revision is now expected to pass the Assembly's plenary session later this week.
"The Commercial Act revision is being viewed as a key measure to address the chronic undervaluation of the Korean stock market and to drive corporate value enhancement, making it particularly attractive to foreign investors," said a senior official in charge of investor relations at a major financial holding company.
Meanwhile, the KOSPI rose 17.95 points, or 0.58 percent, to close at 3,089.65.