South Korea's Pension Fund Backs Government's 'Korea Discount' Fix

South Korea's national pension fund is endorsing the government's corporate reform initiative, aimed at addressing the "Korea discount" issue in the stock market, according to the fund's investment strategy director.

At a press conference in Seoul, Lee Suc-won, the director, highlighted the National Pension Service's support for the reform plan, which targets enhancing shareholder returns and stock prices for listed companies.

The National Pension Service, responsible for managing one of the world's largest public pension funds, is awaiting further details of the reform plan before making decisions on asset allocation.

The term "Korea discount" reflects a tendency for South Korean firms to have lower valuations compared to their global counterparts, attributed to factors such as modest dividend payouts and the influence of large, complex conglomerates called chaebols.

Following the announcement of the reform plan in February, which was aimed at boosting corporate value, the country's financial regulatory authority has pledged to accelerate the formulation of additional measures. These measures could include incentives like tax breaks to encourage voluntary participation from companies in the reform program.

Source: Reuters