In New York, the heart of global capitalism, financial authorities, local governments, and six leading financial companies jointly announced the excellence of K-finance and the "Value Up" program, Korea's capital market advancement policy, to foreign investors.
At the event, which brought together more than 300 financiers, including CEOs of 126 global leading financial companies, including Carlisle, Morgan Stanley and JP Morgan, foreign investors showed high interest in value-up policies and investments in Korean companies.
On the 16th (local time), the Financial Supervisory Service, the Korea Exchange, Seoul, Busan, KB Financial Group, Shinhan Financial Group, Mirae Asset Securities, Korea Investment & Securities, Samsung Life Insurance, and Hyundai Marine held a joint public-private New York IR (Investment Briefing) at the Conrad Downtown Hotel in New York under the theme of "INVEST K-FINANCE: New York IR 2024."
Seven months after the FSS-led large-scale IR in London in October last year, additional exchanges joined the event, helping to promote corporate value-up programs being pursued at the government level.
"As a result of preemptively expanding the loss-absorbing capacity of the Korean financial system, banks, securities, and insurance have sufficient crisis response capabilities," said Lee Bok-hyun, head of the Financial Supervisory Service, in his opening remarks.
"We will support corporate growth and create a reliable investment environment by improving corporate governance and protecting the interests of minority shareholders so that Korea's industrial portfolio can be reorganized into future new growth industries such as bio, fintech, and artificial intelligence (AI)." Lee added.
Jung Eun-bo, chairman of the exchange, took the lead as a value-up ambassador, saying, "Investors need to pay active attention to the success of the corporate value-up program, which aims to resolve the Korean discount phenomenon in the Korean capital market."
In a subsequent presentation on the topic, the Financial Supervisory Service explained to overseas investors about efforts to improve the system to increase global investors' access to the Korean market, and the exchange directly explained the progress and main contents of the corporate value-up policy.
The Seoul Metropolitan Government and the Busan Metropolitan Government had time to introduce strategies for this with the vision to become a global financial hub.
On this day, Director Lee and CEOs of financial companies responded for a long time to various questions asked by global investors on the theme of Korean financial development, showing their willingness to make drastic institutional improvements and management innovations.
Director Lee said, "We will work with the exchange as much as possible to reduce the value-up policy as possible," suggesting the goal of further increasing the speed of the value-up program than now.
In particular, regarding tax support measures that the market is paying attention to as a key factor for listed companies to participate in measures, he explained, "The government is specifically considering appropriate incentives for dividend income and corporate tax reduction measures," adding, "We are discussing the need to improve the (inheritance) system related to the succession of the corporate family business, even if it is difficult to reform the entire inheritance tax."
Even listed companies with excellent technology and sales power are often closed or put up for sale in the M&A market due to excessive detailed burdens they have to pay during family business succession, which means that they will secure a pool of small and medium-sized listed companies that serve as the waist of the Korean stock market by improving them and creating an environment where companies can operate permanently.
Regarding a question about the Korean government's efforts to improve the governance structure of listed companies, Director Lee said, "We are considering revising related laws to prevent the problem of division or overlapping listing (mother and child companies)," adding, "To protect investors, it is necessary to introduce the board's obligation to faithfully shareholders through the revision of the Commercial Act, and we will start discussions at the pan-government level before the next National Assembly is launched in the second half of the year."
Regarding the resumption of short selling, he said, "We can resume some of them if possible in June, but if the technology and system are insufficient, it will be difficult," adding, "We will reveal at least whether it will resume before the end of June, how it will be done, and future policy schedules at a predictable level."
Regarding the dividend policies of domestic financial companies, he said, "An active shareholder-friendly policy is needed under the premise that a certain level of soundness is guaranteed," adding, "As dividends once a year shock the stock market due to dividend fluctuations, we actively encourage financial companies to buy quarterly dividends and treasury stocks."
In order to revitalize retirement pensions, which have become more important due to the aging population, he declared, "We will create a competitive environment in which we can go to a manager with excellent funds by creating a disclosure system that can inform well-earned institutions in the pension market."
Regarding the "transportation tax" for financial companies, which the Democratic Party of Korea said it would pursue in the 21st National Assembly, he said, "The windfall tax, which was previously discussed in some political circles, makes no sense because it is difficult to achieve policy goals and there are elements that are legally unconstitutional," adding, "We will strongly oppose it again if the same type of windfall tax is pursued."
Chairman Chung stressed that he would push with the Financial Supervisory Service to remove "zombie companies" from the stock market, which are abused for unfair practices such as market price manipulation and the pursuit of private interests of major shareholders, while maintaining the name of listed companies.
Chairman Chung said, "It is not desirable for companies that should be withdrawn to remain listed. Based on the principle, zombie companies will be drastically withdrawn to eliminate market uncertainty."
Heads of local financial firms boldly disclosed their management strategies to overseas investors to enhance their corporate value.
KB Financial Group Chairman Yang Jong-hee said, "We will achieve a return on equity (ROE) of 12 to 13% in the mid-term to long-term by strengthening the revenue generation of non-banking sectors such as securities, insurance, and cards. We will continue to grow by reorganizing non-face-to-face sales channels and strengthening personalized services to return (profit) to shareholders."
When asked about the global strategy, Shinhan Financial Group Chairman Jin Ok-dong explained, "We are currently making 5% of the group's gross profit in Vietnam, and we will further grow it and focus on India and Central Asia in the future."
He added, "We will achieve ROE 10% by reducing the number of issued shares, which is 125-160% compared to the current industry through the purchase and incineration of subsidiary shares."
"As 45% of our equity capital is currently located overseas, we will make more than 50% of our overall profits globally in the mid to long term," said Kim Mi-seop, vice chairman of Mirae Asset Securities.
"We will expand our position in the retirement pension market by digitizing asset management services, super-personalizing, and globalizing in line with the aging society," said Kim Sung-hwan, president of Korea Investment & Securities. "We plan to introduce additional excellent products from leading global financial companies in the future, starting with the loan-backed securities (CLO) launched in partnership with Carlyle."
"We will expand the proportion of alternative investments such as real estate, which is currently around 5% of operating assets, to 26% in the future," said Hong Won-hak, president of Samsung Life Insurance.
Cho Yong-il, CEO of Hyundai Marine & Marine Insurance, declared, "We will find new foods such as cybersecurity insurance and pet insurance as well as existing health insurance, and will enter overseas markets through active mergers and acquisitions."
Foreign investors also responded to such efforts to establish Korea's financial value business.
"Global cooperation has become more important than ever as the geopolitical environment has become more complex," said Harvey Schwartz, CEO of Carlyle Group. "As investing in partnerships is investing in trust, we hope Carlyle Group will be able to contribute to the Korean government's efforts to advance the capital market as a Korea-U.S. business partner."
Daniel Simkowitz, co-chairman of Morgan Stanley, said, "It is encouraging that the capital market reform, which is being promoted through public-private cooperation in Korea, is being activated. With investors around the world interested in Korea, the corporate value-up program will be able to attract market investment (in Korea)."
Rob Lee, managing partner of Amont Partners, a global asset management company based in New York, said at an individual IR event held by Korea Investment & Securities on the same day, "The commitment to shareholder return, the policy of foreign investor-friendly and encouraging investment in Korea was noticeable."
Meanwhile, Director Lee attended a breakfast meeting with the Korean Financial Association (KFS) on the 17th (local time) and asked Korean financiers active on Wall Street in New York to promote Korea's capital market advancement policy and play a role as a bridge between Korea and the U.S.
Mark Kim, chairman of KFS, explained, "We have conveyed (to the authorities) that it is important to increase transparency in the capital market for the success of the value industry."
Following the event, the Financial Supervisory Service plans to continue to push for IR in various ways to promote K-finance in major global financial cities such as Hong Kong.
New York = Reporter Kim Tae-sung
