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서울시 서울시 서울시
  • Subject Seoul Financial Hub
  • Purpose Expert Panel Discussion and Proposals for Improvement on Domestic and International Financial Environment and Financial Policies in 2024
  • Venue One IFC 16F
  • Contents

Seoul Financial Hub organized '2024 SFH Connect Seoul Financial Innovation Forum' 

The theme of the first debate is

"​Introduction of corporate value-up program and policy directions to resolve Korea discount"

Professional panelists discussed issues and solutions to the 'Korea Discount' with various perspectives and deep insights.

The video of the first debate is available on Seoul Financial Hub's YouTube channel.

Click the title below to go to the video for that content.

▶ 2024 SFH Connect Seoul Financial Innovation Forum 1 [Korean]

▶ 2024 SFH Connect Seoul Financial Innovation Forum 1 [English]

Thank you.

2024 SFH Connect Seoul Financial Innovation Forum Topic I Introduction of corporate value-up programs and policy directions to resolve the Korea discount Choi Soo-Hyun (Chair Professor, Kookmin University) Lee Hyo-Seob (Head of Financial Services Industry Department, KCMI) Cheon Joon-Bum (CEO, Wise Forest Co.Ltd.) Lee Dong-Youp (Associate Professor, Kookmin University)
Comparison of Stock Index PBR & PER in Major Countries The 10-year average PBR of the Korean stock market is 1.04, the lowest among major countries. During the same period, the United States (3.63), Taiwan (2.07), Germany (1.59), China (1.50), Japan (1.40), and Korea (1.04) were the highest in that order. At the end of 2023, Korea recorded the lowest PBR compared to major countries. The 10-year average PER of the Korean stock market is 14.2, which is low among major countries. During the same period, the United States (21.77), Japan (16.86), Taiwan (15.95), Germany (15.79), Korea (14.16), and China (13.09) were the highest in that order. In other words, it is judged to be somewhat undervalued in terms of corporate profit multiple. 10-Year average major country stock index PBR Graph U.S 3.63 Germany 1.59 Japan 1.4 Taiwan 2.07 China 1.5 Korea 1.04 Data: Bloomberg MSCI Index, average of each year from 2014 to 2023 10-Year average major country stock index PER Graph U.S 21.77 Germany 15.79 Japan 16.86 Taiwan 15.95 China 13.09 Korea 14.16 Data: Bloomberg MSCI Index, average of each year from 2014 to 2023
Comparison of Stock Index ROE & Shareholder Return Rate in Major Countries The 10-year average ROE of the Korean stock market is 7.9%, the lowest among major countries. During the same period, the U.S (14.9%), Taiwan (13.6%), China (11.5%), Germany (9.1%), Japan (8.3%), and Korea (7.9%) were the highest in that order. Korea’s ROE at the end of 2023 was 5.2%, the lowest among major countries. Korea’s shareholder return ratio, taking into account the rate of treasury stock repurchase, is the lowest among major countries. Korea’s shareholder return rate (=dividend payout ratio + treasury stock repurchase rate) ranks among the lowest among major countries. 10-Year average major country stock index ROE Graph U.S 14.9% Germany 9.1% Japan 8.3% Taiwan 13.6% China 11.5% Korea 7.9% Data: Bloomberg MSCI Index, average of each year from 2014 to 2023 10-Year average shareholder return rates among major countries Graph Korea 29% Divided payout ratio 22% Treasury stock repurchase rate 7% U.S 91% Divided payout ratio 39% Treasury stock repurchase rate 51% Developed countries other than the United States 50% Divided payout ratio 22% Treasury stock repurchase rate 17% China 29% Divided payout ratio 22% Treasury stock repurchase rate 2% Emerging countries 38% Divided payout ratio 34% Treasury stock repurchase rate 4% Data: KB Securities
Policy Direction for Successful Enterprise Corporate Value Up Program Expand participation in Value-Up Mid- to long-term investment base Start-Up Incubation Improvement of governance structure Improvement of the listing maintenance system improvement of the tax system
Implications and Key Suggestions Lee Hyo-Seob Head of Financial Services Industry Department, KCMI Encouraging companies to voluntarily disclose is important. The corporate value-up program is particularly focused on the cost of capital. In the past, Korean companies have not paid attention to the cost of capital, but the program is characterized by recommending improvements in corporate governance to align the interests of major and minority shareholders. Another notable feature of the program is that it encourages voluntary disclosure by companies, and if the program is well established, it is expected to improve overall corporate transparency. Lee Dong-Youp Associate Professor, Kookmin University Corporate decision-making structure is important. I believe that the decision-making structure of a company is important for corporate value enhancement. Innovative shareholder-oriented return systems based on rational management should be introduced, and institutional mechanisms should be put in place to resolve conflicts of interest between controlling shareholders and common shareholders in order to increase corporate value. In addition, I believe that various government supports for promising industries and bold support for innovative ventures are needed to secure sustainable growth engines.
Implications and Key Suggestions Cheon Joon-bum CEO, Wise Forest Co.Ltd. It is essential for the government to promote corporate value-up programs. The delay in innovation of the company itself is also deeply related to the issue of corporate governance. In particular, it seems necessary to consider whether most Korean companies, which are centered on family management, can continue with the same governance structure even after the third generation. The government’s corporate value-up program is essential, and the stagnation of Korean companies is a national economic problem, and should be recognized as a problem for future generations. In particular, as Korea enters an era of low birth rates, I think the issue of resolving the Korea discount should be approached from the perspective of national survival. Choi Soo-Hyun Chair Professor, Kookmin University It is important to set mid-to long-term goals for the corporate value-up program. The first step of the government’s corporate value-up program is an important point. The government’s program to increase corporate value is not something that will end temporarily, but it is important to set mid-to long-term goals for the Korean economy, and I think it should be promoted from a long-term perspective.
 

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