Seoul - The South Korean bond market experienced shifts in yields across various maturities on March 19, 2024, reflecting subtle yet notable changes in investor sentiment and market dynamics.
According to Yonhap News Agency, the yields on South Korean treasury bonds (TBs) and monetary stabilization bonds (MSBs) fluctuated, marking adjustments in key interest rates. The one-year TB yield inched up by 0.4 basis points to 3.361%, while more significant movements were observed in longer maturities: the two-year TB yield increased by 3.1 basis points to 3.444%, the three-year TB advanced by 3.5 basis points to 3.383%, and the ten-year TB rose by 3.7 basis points to 3.472%.
In the corporate bond sector, the two-year MSB rate also ascended, showing a rise of 2.8 basis points to 3.448%. Meanwhile, the three-year corporate bond (CB) rated AA- witnessed an increase of 2.9 basis points, reaching 4.022%.
Interestingly, the 91-day certificate of deposit (CD) rate remained unchanged at 3.640%, indicating a steadiness in shorter-term liquidity preferences among investors.
These movements in bond yields reflect the broader economic and monetary trends impacting South Korea's financial markets, with investors closely monitoring various domestic and global factors influencing interest rates.
Seoul - In a strategic move to enhance the performance of South Korean companies in the global market, Finance Minister Choi Sang-mok unveiled a plan to offer tax incentives to firms that increase shareholder returns.According to Yonhap News Agency, the initiative is part of the broader "corporate value-up program" aimed at addressing the "Korea discount," a situation where South Korean firms are undervalued compared to international counterparts. The government's strategy focuses on incentivizing companies to boost their valuation through enhanced shareholder dividends and other return mechanisms.
Choi detailed that the proposed tax relief would apply to the portion of a company's increased shareholder returns, aiming to make such financial strategies more attractive and sustainable. Moreover, individual shareholders benefiting from raised dividends will experience additional income tax reductions. The specifics of these tax adjustments will be finalized following consultations with industry specialists and after thorough examination of various expert insights.
The "Korea discount" phenomenon, attributed to factors like modest dividend distributions, geopolitical concerns, and the dominance of large conglomerates in the market, has been a longstanding challenge for South Korean enterprises seeking to elevate their global standing and attract foreign investment.