If global investors were in a wait-and-see mode before, they can toss away Seoul’s proposal now. The short-lived martial law that stunned the world is a great reminder of what they dislike about South Korea: It’s a market full of billionaire family feuds and handshake deals. Foreigners are the last ones to find out what’s going on.
South Korean President Yoon Suk Yeol has been touting a so-called corporate value-up plan to tackle the nation’s notoriously depressed stock market this year. After briefly declaring martial law late Tuesday, he can kiss that initiative goodbye.
Yoon is borrowing the concept from Japan, where a decade-long corporate governance reform is luring global investors back. Companies are encouraged to come up with plans on how to improve financial metrics, such as price-to-book or returns on equity. One approach is to name and shame firms that don’t attempt to make money for shareholders. The Korea Value-up Index, introduced in September, clearly takes a page out of Tokyo’s successful “shame index.”
