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Asian takeaways: Bibimbap bulletin
We’re proud to present the third piece in our ‘Asian takeaways’ series, where we’ll share local insights on what’s happening across Asia-Pacific. From India to Indonesia, from Taiwan to Thailand, we give our views on the dynamic changes across the region, while showcasing our learnings from being ‘on the ground’ at company and site visits.
My recent trip to South Korea came at a timely moment, following the recent unveiling of the Financial Service Commission’s ‘Value-up’ programme. Initiatives include encouraging listed companies to increase disclosures (particularly with regard to plans to enhance corporate value), improve dividend payout ratios, and upgrade shareholder return policies, including share buybacks and retirements.
In my piece, I look at the following key implications of the programme:
- Neighbourly competition: hot on the heels of Japan’s corporate governance reforms, Korea is keen to play ‘catch-up’.
- Political implications: the programme could drive a rising domestic market, leading to voter support. It could also unite younger voters.
- Company meetings: responses to the programme have varied, depending on managements’ place on the market cap spectrum.
While the ‘Value-up’ initiative was a dominant theme throughout my trip, Korea’s electric vehicle market was also a strong focus. Plant tours with Hyundai Motors and Kia Motors and meetings with major battery manufacturers, cathode makers and separator companies supported favourable outlooks, in spite of recent weakness in volume and price trends.
Last but not least, a few mall visits provided a striking contrast to the rest of my trip, and the low foot traffic at Seoul’s duty-free stores was clearly visible. These stores have been suffering on the back of a slow recovery on inbound tourism from China, something which is expected to improve towards the end of this year. In the meantime, high price discounts from Chinese duty-free companies have added to reduced sales.
Yet, there is there is clearly room to breathe new life into corporate Korea and the economy as a whole. A broadly positive response for the FSC’s initiative from management teams is a good sign, and as the programme is rolled out, we would expect investor interest in the region to grow – particularly with Japan’s recent turnaround top of mind.
Read our full piece here
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