Korea’s Financial Services Commission (FSC), which introduced a programme aimed at boosting shareholder value earlier this year, is now promoting it to locally listed firms ahead of the introduction of indexes and exchange-traded funds linked to the scheme.
The so-called Corporate Value Up programme looks to address what’s known as the Korea discount, where local stocks tend to be valued lower than global peers due to reasons such as low dividend payouts.
Unveiled in February, the voluntary programme comprises a set of guidelines on how companies can set up mid- to long-term plans and targets for improving shareholder value.
Min Woo Park, director general of the FSC’s capital market bureau, said the guidelines were released on May 27 and the financial regulator is promoting it to companies listed on the Korean bourse and encouraging them to participate.
Speaking at a conference organised by Asia Asset Management in Seoul on May 30, he said the FSC and the Korea Stock Exchange are providing education for company boards and supporting small- and medium-sized companies to join the programme. They are also launching a dedicated homepage for the scheme.
“There have been some companies that will announce a business plan relating to the programme within this year,” Park said. “We will continue to pursue and promote this policy in the medium term.
Indexes and ETFs linked to the programme are scheduled to be introduced in the second half of the year.
According to Park, the ETFs will be able to draw interest from local institutional investors such as pension funds.
He declined to provide estimates when asked to predict the expected inflows, saying it was not appropriate as a financial regulator to comment on the potential impact on the capital market.