Korean listed companies purchased approximately 19.9 trillion won in treasury stocks during the first half of the year, marking the largest buyback scale in the past five years. The surge in stock buybacks reflects companies' efforts to support share prices and enhance shareholder value amid global economic uncertainty and increased market volatility. This trend coincides with the government's corporate value enhancement policy, which has intensified pressure on listed companies to increase shareholder returns through dividends and buybacks.
Korean Stocks Buyback Scale Quadruples From Previous Years
According to Korea Exchange's information data system, listed companies' stock buyback scale from early January to the end of June totaled approximately 19.9358 trillion won. If companies complete acquisitions through the second half as initially disclosed, the total will reach 20.67 trillion won. This represents the largest scale in recent five years. By first-half periods: 3.6393 trillion won in 2022, 3.8482 trillion won in 2023, 4.7580 trillion won in 2024, and 8.9624 trillion won in 2025. The current year's first half equals the combined total of the previous four years' first halves.
KOSPI Companies Account for 19.3 Trillion Won in Buybacks
By market, stock buybacks concentrated among KOSPI-listed companies, while KOSDAQ-listed companies also joined the buyback movement for share price support. KOSPI-listed companies alone acquired 19.3896 trillion won worth during the first half, accounting for virtually all of the total. Based on the first-half trend, annual stock buyback scale will likely set an all-time record. Companies are using stock buybacks to defend share prices while utilizing them as a representative shareholder return method alongside dividends. Investors interpret this as a signal that companies perceive current stock prices as undervalued, as reducing outstanding shares increases earnings per share (EPS) and per-share value.
Commercial Law Amendment Requires Mandatory Cancellation With Exceptions
In March, a Commercial Law amendment mandating treasury stock cancellation passed, but controversy arose over its effectiveness as it included provisions allowing exceptional retention or disposal for employee compensation or business purposes. If acquired treasury stocks are retained rather than canceled, or used for employee compensation or merger and acquisition (M&A) consideration, the per-share value increase effect remains limited. Experts evaluate the expansion of stock buybacks itself as a positive signal, while emphasizing that institutional and voluntary improvements must accompany it to lead to substantial shareholder returns.
Lawyer Roh Jong-hwa of Economic Reform Solidarity stated, "It is regrettable that exceptions based on business needs were recognized. Even if the law permits it, if companies truly acquired treasury stocks for shareholder value enhancement purposes, most should be canceled, and actual cancellation must occur for shareholder value enhancement to materialize."
Legislator Proposes Removal of Business Purpose Exception
Due to these concerns, legislative movements to reduce exception clauses continue within the ruling party. Democratic Party legislator Lee Jung-moon proposed a Capital Markets Act amendment deleting "cases for achieving business purposes" from mandatory treasury stock cancellation exceptions. This stems from concerns that numerous listed companies changed their articles of incorporation citing this exception clause after the revised Commercial Law took effect, potentially undermining the system's intent.
FAQ
What was the scale of Korean stocks buybacks in the first half of the year?
Korean listed companies purchased approximately 19.9 trillion won in treasury stocks during the first half of the year, marking the largest buyback scale in the past five years.
What did the Commercial Law amendment passed in March require?
The Commercial Law amendment passed in March mandated treasury stock cancellation, but included provisions allowing exceptional retention or disposal for employee compensation or business purposes.
What legislative action did Democratic Party legislator Lee Jung-moon propose?
Legislator Lee Jung-moon proposed a Capital Markets Act amendment deleting "cases for achieving business purposes" from mandatory treasury stock cancellation exceptions.
