South Korean Market Index Sees 5% Gain After Double Listing Ban Implemented

Global Markets Report - March 18, 2024

South Korean Markets

The KOSPI index surged 5% on Wednesday, marking the third consecutive session of gains. This rally came after Financial Services Commission Chairman Lee Eog-weon announced measures to limit listed companies from spinning off and listing certain subsidiaries. This move aims to address a long-standing practice known as "double listings" that can erode shareholder value and contribute to the country's persistent equity undervaluation, also referred to as the "Korea discount".

Double listings often weigh on holding-company valuations, and the government seeks to enhance market valuations and reduce the gap with global peers. The government will establish standards to protect shareholder rights and interests and prohibit duplicate listings through strict screening. Korean authorities will also urge firms with low price-to-book ratios to improve corporate value.

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Asian Markets

In Japan, the Nikkei 225 surged 2.87% to 55,239.4, while the Topix advanced 2.49% to 3,717.41. This rally came after data showed exports grew 4.2% year-on-year in February, surpassing estimates. Investors now await the Bank of Japan's policy decision due on Thursday.

In Australia, the S&P/ASX 200 edged up 0.31% to 8,640.6. Meanwhile, Hong Kong's Hang Seng Index gained 0.68%, while the CSI 300 rose 0.45% to 4,658.33.

US Markets

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The S&P 500 rose 0.25% to 6,716.09 points, while the Nasdaq Composite advanced 0.47% to 22,479.53 points. The Dow Jones Industrial Average edged up 0.10% to 46,993.26 points. The Federal Reserve began its two-day monetary policy meeting on Tuesday, with traders widely expecting it to keep borrowing costs unchanged. Rate futures now point to expectations of just one 25-basis-point rate cut later this year, compared with roughly two anticipated before the onset of the conflict.