Global markets today: South Korean shares rallied for the third consecutive session on Wednesday, March 18, after regulators took steps to limit listed companies from spinning off and listing certain subsidiaries, addressing a long-standing practice seen as eroding shareholder value.
The benchmark KOSPI jumped 5% after Financial Services Commission Chairman Lee Eog-weon announced fresh measures at an investor meeting in Seoul on Wednesday. The surge also led to a temporary pause in trading to manage volatility.
What are double listings?
“Double listings” often weigh on holding-company valuations and are widely regarded as a key structural factor behind South Korea’s persistent equity undervaluation, commonly referred to as the ‘Korea discount’, according to a Bloomberg report.
By prohibiting such practices, the government seeks to enhance market valuations and reduce the gap with global peers.
“We will establish solid standards to ensure that the rights and interests of general shareholders are not harmed by the simultaneous listing of parent and subsidiary companies. We will prohibit duplicate listings in principle through strict screening,” Lee was quoted as saying by Bloomberg.
To discourage companies from overlooking low share prices, Korean authorities will urge firms with low price-to-book ratios to improve corporate value, including through measures such as publicly identifying underperforming companies, the FSC chairman added.
The Bloomberg report further noted that many Korean conglomerates, known as chaebols, have traditionally relied on listing their affiliates to raise funds. Several large groups, including SK Inc., HD Hyundai, and Hanwha Group, are currently planning to float shares of their subsidiaries.
Asian markets today
Japan’s Nikkei 225 surged 2.87% to 55,239.4, while the Topix advanced 2.49% to close at 3,717.41, 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, March 19.
Australia’s S&P/ASX 200 edged up 0.31% to finish at 8,640.6. Meanwhile, Hong Kong’s Hang Seng Index gained 0.68%, while the CSI 300 rose 0.45% to 4,658.33.
Meanwhile, the Middle East conflict continues to intensify, keeping investors cautious. A fresh round of attacks targeting energy infrastructure in the United Arab Emirates has raised concerns over prolonged supply disruptions amid the ongoing tensions involving Iran.
US markets update
Wall Street closed higher on Tuesday, supported by gains in Delta Air Lines and other travel-related stocks. The Federal Reserve kicked off its two-day policy meeting amid investor concerns over elevated oil prices and the ongoing Middle East conflict.
The S&P 500 rose 0.25% to finish at 6,716.09 points. The Nasdaq Composite advanced 0.47% to 22,479.53 points, while the Dow Jones Industrial Average edged up 0.10% to 46,993.26 points.
The central bank began its two-day monetary policy meeting on Tuesday, with traders widely expecting it to keep borrowing costs unchanged in Wednesday’s decision. According to LSEG data, as quoted by Reuters, 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.
(With inputs from agencies)
Disclaimer: This story is for educational purposes only. Please consult with an investment advisor before making any investment decisions.
