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Incentives such as tax support for companies participating in 'value up'

Incentives such as tax support for companies participating in 'value up'

Posted February. 27, 2024 07:33,   

Updated February. 27, 2024 07:33


To address the persistent 'Korea discount,' the government has introduced a support plan to assist companies in enhancing shareholder value. The focal point involves offering incentives, including tax support, to publicly listed companies that regularly disclose strategies to enhance their corporate value.

On Monday, the Financial Services Commission, in collaboration with the Korea Exchange and the Korea Capital Market Institute, organized the 'First Seminar on Corporate Value Up Support Plans for a Leap Forward in the Korean Stock Market' and unveiled the specifics of the corporate value up program. "We will provide guidelines to encourage listed companies to enhance their corporate value," Chairman Kim Joo-hyun said. "Bold incentives will be offered to promote voluntary participation from companies."

The government is set to introduce a new index and a corresponding exchange-traded fund (ETF) by the end of the year, facilitating capital influx into companies actively enhancing their corporate value. Moreover, plans include recognizing companies with outstanding disclosures through commendations and incentives such as tax support and index inclusion for the identified target companies.

Yet, the market response was tepid. This initiative exhibits distinct limitations in altering the fundamental structure of the Korean stock market. The KOSPI concluded at 2,647.08 on that day, marking a 0.77% decrease from the preceding day. Most stocks characterized by a 'low price-to-book ratio (PBR),' perceived as notable beneficiaries of the corporate value industry, experienced a sharp decline, exemplified by KB Financial Group and Shinhan Financial Group, whose stock prices plunged by 5.02% and 4.5%, respectively.

강우석 기자 wskang@donga.com