South Korea's Financial Services Commission announced a comprehensive policy package for the second half focusing on KOSDAQ market structural reform and shareholder value enhancement measures. FSC Chairman Lee Eok-won stated the commission will accelerate financial structural reforms to support an irreplacible South Korea. The announcement comes as KOSPI recorded a 91.9% gain through the 3rd, ranking first among major global indices, with market capitalization rising from 13th to 7th globally and PBR reaching 3.06x.
KOSPI Records Top Global Gains as KOSDAQ Structural Reform Launches
KOSPI's price-to-book ratio reached 3.06x, surpassing Japan at 2.07x and Germany at 1.94x, though still below Taiwan at 5.99x. Cash dividends increased from 43.3 trillion won in 2023 to 56 trillion won last year. Treasury stock buybacks totaled 43.1 trillion won from January to May this year, up 101.4% year-over-year.
The FSC will implement a three-part structural innovation program for the relatively undervalued KOSDAQ market. Entry requirements will be eased by adding three sectors to customized technology special listing categories during the second half. Exit procedures will be expedited through strengthened delisting requirements for penny stocks and market cap thresholds, with measures effective from the 1st of this month. Segment separation to distinguish premium and general companies will be implemented in January next year.
Korea Premium Week will run for three weeks from September 28 to October 16 to attract foreign capital and companies. The core week from September 28 to October 2 will feature exchanges between global pension funds, investment banks, asset managers and domestic companies. The follow-up period from October 6 to 16 will include open investor relations events for KOSDAQ, KONEX and pre-IPO companies led by private financial institutions. The event benchmarks Japan's Japan Weeks (from 2023) and Taiwan's Taiwan Weeks (from 2025). One US company has reportedly expressed interest in a secondary KOSDAQ KDR listing, with over 10 companies considering listings.
FSC Implements Dual Listing Ban and Low-PBR Disclosure System
The principle ban on dual listings to protect general shareholder interests will be pursued from this month. The measure imposes five specific fiduciary duties on parent company boards and introduces special review standards requiring shareholder consent for dual listing exceptions.
The low-PBR company disclosure system will launch in November, publishing lists and attaching tags to companies whose PBR falls below industry-specific thresholds to encourage value enhancement. Capital Markets Act amendments to introduce flexible dividend systems allowing companies to design dividend schedules more freely target implementation in the first half of next year.
Enforcement against market manipulation targeting individual investors will be strengthened. Capital Markets Act amendments granting investigative officials authority to request telecommunications data will be pursued in the second half. Investment principal confiscation will expand from existing market manipulation cases to include undisclosed information use and fraudulent trading. Measures to block illegal activities by financial influencers will be prepared by December.
A roadmap for settlement cycle shortening to T+1 will be completed by October. The plan provisionally targets conversion during 2027, comprehensively overhauling foreign exchange and capital systems and securing cooperation from foreign investors. Additional measures to be prepared during the second half include interest payments on IPO subscription deposits, review of margin loan interest rates currently around 9% annually, and priority allocation of IPO shares to parent company general shareholders when subsidiaries list after physical splits.
Korea Strategic Technology Partners Targets 10 Trillion Won Fund
The FSC plans to establish the Korea Strategic Technology Partners (KSTP) to transform future source and core technologies into national strategic assets. The specialized management company will be jointly established by policy financial institutions and private financial firms, supplying long-term large-scale investment funds up to 10 trillion won using policy funds as seed capital.
Son Young-chae, head of the National Growth Fund promotion team, stated that the KSTP management company will primarily engage in direct investment operations. He added that KSTP could be a strong candidate when selecting capable managers for the National Growth Fund's indirect investment portion.
Regarding regulations on single-stock leveraged ETFs that increase market volatility, FSC Secretary General Shin Jin-chang stated that the official position is to devise measures considering market impact through market monitoring meetings involving the Ministry of Economy and Finance, FSC, Financial Supervisory Service, and Bank of Korea. He confirmed that the four institutions are currently in the discussion stage.
FAQ
What structural reforms did South Korea's FSC announce for KOSDAQ?
The FSC announced a three-part structural innovation program for KOSDAQ including eased entry requirements with three additional sectors for technology special listings in the second half, strengthened delisting requirements for penny stocks and market cap effective from the 1st of this month, and segment separation to distinguish premium and general companies launching in January next year.
When will South Korea's low-PBR company disclosure system launch?
The low-PBR company disclosure system will launch in November, publishing lists and attaching tags to companies whose price-to-book ratio falls below industry-specific thresholds to encourage value enhancement.
What is the timeline for South Korea's Korea Premium Week?
Korea Premium Week will run for three weeks from September 28 to October 16, with the core week from September 28 to October 2 featuring exchanges between global institutional investors and domestic companies, followed by open investor relations events from October 6 to 16 led by private financial institutions.
