SEOUL - South Korea's Financial Services Commission (FSC) announced on Monday plans to introduce tax incentives aimed at encouraging local firms to boost their corporate value, thereby increasing investor returns.
According to Yonhap News Agency, this initiative is part of a broader strategy to address the "Korea Discount" phenomenon, where local stocks are perceived to be undervalued relative to their fundamentals.
The announcement came during a seminar led by FSC head Kim Joo-hyun, focusing on measures to motivate companies to enhance their valuation. The seminar served as a platform for introducing the Corporate Value-up Program's key aspects, developed in collaboration with related institutions, to stimulate dialogue and gather feedback from various stakeholders.
The FSC disclosed plans for a second seminar in May, aimed at refining these guidelines with input from the business community, with the goal of finalizing them within the first half of the year. Proposed incentives include tax benefits designed to encourage companies to voluntarily undertake value-enhancement efforts and to communicate their initiatives to the market.
Moreover, the government intends to develop a Corporate Value-up Index to assist institutional investors, including pension funds, in making informed investment decisions by identifying companies expected to increase their corporate value. The FSC also plans to introduce exchange-traded funds that track the Korea Value-up index, enhancing retail investors' access to these firms.
To support these initiatives, the Korea Exchange, Seoul's main stock market, will establish a dedicated department and advisory board focusing on the corporate value-up program. FSC Chairman Kim emphasized the importance of creating a positive feedback loop in the capital markets, where companies are rewarded for healthy growth and investors can profit and reinvest in the Korean market.
The FSC's efforts were further underscored by a meeting between First Vice Finance Minister Kim Byung-hwan and Ian Linnell, president of global credit appraiser Fitch Ratings. The discussions covered various strategies to advance South Korea's financial market, including the Corporate Value-up Program, which is seen as a pivotal measure to mitigate the Korea Discount issue.