Holding company revaluation gains momentum, PBR 1times-based valuation method and expectations for treasury share cancellations
Holding company shares have been quietly strengthening on the South Korean stock market this year. Expectations of a revaluation of holding companies have grown amid a series of policy changes, including amendments to the Commercial Act, the Value-Up program, mandatory cancellation of treasury shares, and efforts to advance the so-called “Stock Price Suppression Prevention Act.”
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Holding company shares have continued their quiet upward trend on the South Korean stock market this year. Policy changes have followed one after another, including amendments to the Commercial Act, the Value-Up program, mandatory cancellation of treasury shares, and efforts to advance the so-called “Stock Price Suppression Prevention Act.” Reports say this policy momentum is affecting how holding companies are valued.
The financial investment industry has recently viewed the strength in holding company shares not as a simple investment theme but as a structural revaluation trend. Eun Kyung-wan, a researcher at Shinhan Securities, said that holding companies were once seen merely as an indirect investment vehicle for their core subsidiaries, but recently have come to mean more than a simple substitute. He noted that expanding passive investment flows, policy changes, and expectations of a narrower discount to net asset value (NAV) are all having an effect at the same time.
Among the proposed amendments to the Commercial Act are provisions concerning directors’ duty of loyalty. Reports said these legal and institutional changes could affect shareholder rights and holding company governance. The reports also said that the Value-Up program and mandatory treasury share cancellation measures are being implemented alongside them.
Reports also said that a bill to prevent stock price suppression is being pursued. The bill was described as legislation intended to restrict actions that suppress share prices in the market. The report noted that the bill could affect valuations of holding companies.
Based on recent trends, the report said that holding companies are emerging as one pillar of a revaluation of the Korean stock market. The article summarized views that this shift differs from a simple thematic investment trend. It added that the specific impact should be assessed through disclosures and earnings from individual holding companies.
The article repeatedly pointed to the simultaneous effects of expanding passive investment and policy variables. Expectations of a narrower discount to net asset value were presented as the backdrop to discussions of revaluation. The report said that the bill’s legislative timetable and detailed implementation provisions should be confirmed through future disclosures and government announcements.
Sources: 파이낸셜뉴스 증권
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