KT Stocks Limit of Foreign Investors, Expanded from 37.2% to 49%

The KT stocks acquisition limits of foreign investors increase considerably.

KT said on August 8 “We will revise the articles of incorporation in an extraordinary general meeting of shareholders for privatization in August 20 and then will increase the stocks acquisition limit of foreign investors from 37.2% to 49%.”

Lee Gyu-Seong, the manager of the stockholders cooperation department, KT said “Through this measure, foreign investors will be able to buy 3,700 shares which is 11.8% of total stocks issued in the stock market additionally.” At that day, the stock price of KT closed to KRW 4,7000 increased by KW 4,400(10.3%) over the previous date.

The Telecommunications Business Act allowed foreign investors investing up to 49% of total stocks issued for the basic communication industries such as KT. KT established the investment limits of foreign investors with 37.2% to issue Bond with Warrant (BW) and Exchangeable Bond (EB) which are the stock-related corporate bonds, for 11.8% of equities in foreign countries in January.

However, the Ministry of Information and Communication recently interpreted “Stocks-related corporate bonds are not the stocks and cannot be considered as the equities of foreign investors.” Accordingly, the foreign investors can buy the stocks of 11.8% additionally according to its authoritative interpretation.

Yang Jong-In, the analyst of Dongwon Securities said “Whenever the investment limits increase so far, foreign investors increase their volume of stocks. It is a favorable factors in the stock market, and so the stock price will show the increase tendency.”

It is forecasted that ‘Oversupply’ will be considerably solved as the privatization has been progressed.

Lee Yeong-Ju, the analyst of Dongwon Securities said “The stock price didn’t increase because the government equities which are 20.8% of total stocks were flowed into the market. Through this measure, over the half the burden could be solved.”

Tae-Han Kim Na-Yeon Lee freewill@donga.com larosa@donga.com