Lee Yeon-woo is a financial journalist at The Korea Times. Her wide range of reporting includes policies, macroeconomics, stock market, companies and even crypto. She is passionate about connecting the dots in Korean finance and making it easier for foreign nationals to understand. Based on her previous experience as a national reporter, she also has a keen interest in social issues within the sector, including gender equality and ESG. Your tips and insights are always appreciated. You can send them to yanu@koreatimes.co.kr.
Shares of holding firms rise as Lee pledges to retire treasury stocks
While running for president, Lee Jae-myung holds up a sign reading “KOSPI 5000 Era” during a campaign rally in Seoul, May 29. Yonhap
By Lee Yeon-woo
The stock prices of holding companies, which had long remained in the doldrums, are now soaring amid expectations that President Lee Jae-myung will enforce the retirement of treasury shares, industry officials said Friday.
According to the Korea Exchange, Hanwha Corp's stock price has surged by 80.3 percent over the past two weeks. Other major holding companies also posted significant gains: SK Inc. (35.9 percent), Doosan Corp. (33.6 percent), Lotte Corp. (22.6 percent), CJ Corp. (21.2 percent) and LS Corp. (19.7 percent).
Holding companies have long been regarded as typical low price-to-book ratio stocks — key targets of the government's Corporate Value-up Program.
Factors such as the dual listing of subsidiaries and owner-centric decision-making have contributed to their undervaluation. Individual investors have also criticized these companies for their passive approach to retiring treasury shares, which they see as a means of defending the management rights of controlling shareholders.
Expectations are rising that the new administration may address these issues. During the campaign, Lee vowed to establish a system mandating that listed companies cancel their treasury shares "in principle," aiming to return value to shareholders and ultimately boost the domestic stock market.
Lotte had the highest proportion of treasury shares among major holding companies, accounting for a notable 32.51 percent. SK followed with 24.80 percent, trailed by Doosan at 18.16 percent. LS held 15.07 percent of shares, with Shinsegae at 10.94 percent, and HD Hyundai at 10.54 percent.
"If policy reforms such as revisions to the Commercial Act are implemented, and holding companies continue to enhance their long-term corporate value and expand shareholder returns, the recent stock price surge may be just the beginning," said KB Securities analyst Park Kun-young.
Still, analysts in the brokerage industry believe a cautious approach is needed, as the specific policy details have yet to be clarified. Strong resistance from the business community is also expected, since the policy could potentially undermine the management control of controlling shareholders.