After Japan’s comeback, South Korea is hoping for its own stock market boom

Seoul is undertaking reforms to counter the so-called ‘Korea discount’ dragging down the valuations of its firms. Korea’s stock market capitalisation rose 23.1 percent from 2022 to 2023, with foreign investors making up nearly one-third of shareholders, according to the Korea Financial Investment Association. The dominance of family-run conglomerates known as “chaebol”, poor corporate governance, poor returns for shareholders and tensions with North Korea have all been blamed for the so-called “Korea discount” – the name given to the persistently low valuations of corporate giants in Asia’s fourth largest economy. Although South Korea’s Financial Services Commission has pledged to roll out “much stronger” incentives than those offered in Japan, the proposals have so far largely failed to impress investors. “This could be because the controlling shareholders want to keep the share prices low so that they could save inheritance taxes, et cetera.” Lim said measures such as tax cuts will be difficult to implement after the centre-left Democratic Party won 175 of the 300 seats up for grabs in last month’s National Assembly elections.