Core Viewpoint - Investors are increasingly optimistic about the South Korean stock market due to the new president's "shareholder-friendly" policies, which are expected to enhance returns significantly [1][4]. Group 1: Market Sentiment and Foreign Investment - Major global asset management firms, including Aberdeen Investments, Pictet Wealth Management, and Franklin Templeton, have recently increased their holdings in South Korean stocks or upgraded their outlook for the Korean market [1]. - On the first day of Lee Jae-myung's presidency, foreign capital returned to the South Korean stock market, pushing the KOSPI index into a bull market, indicating investor confidence in the new administration's ability to enhance shareholder returns [4]. Group 2: Corporate Governance Reforms - Lee Jae-myung's administration aims to strengthen corporate governance and improve market returns, with a focus on amending commercial laws to enhance the responsibilities of boards towards shareholders [4][6]. - The proposed reforms include improving the nomination process for audit committee members and implementing electronic voting systems, targeting the chaebols and their founding families who have significant influence over the economy and corporate management [6]. Group 3: Shareholder Activism and Corporate Value Enhancement - There has been a sevenfold increase in shareholder activism targeting South Korean companies from 2020 to 2024, reflecting growing investor dissatisfaction with the disconnect between corporate profits and returns to minority shareholders [6]. - The government is expected to deepen the "Corporate Value-up" initiative, which encourages companies to adopt measures to enhance shareholder returns, similar to Japan's "pointing out" mechanism [6]. Group 4: Positive Market Indicators - The total dividend payout of companies in the KOSPI index is projected to increase by 12% year-on-year in 2024, reaching 44 trillion KRW (approximately 32.4 billion USD), while stock buybacks are expected to double to 18.7 trillion KRW [6].

Core Viewpoint - Investors are betting on the new shareholder-friendly policies of South Korea's President Lee Jae-myung to drive the Korean stock market upward after years of underperformance [1][2] Group 1: Market Sentiment and Investment Actions - Global asset management firms like Aberdeen Investments, Pictet Wealth Management, and Franklin Templeton have recently increased their holdings in Korean stocks or upgraded their outlooks [1] - Aberdeen Investments has raised its allocation to Korean stocks to overweight in its $1.2 billion Asia ex-Japan fund [1] - Since President Lee's inauguration, the KOSPI index has risen over 4%, rebounding more than 20% from its April low, approaching a bull market [2] Group 2: Legislative Reforms and Corporate Governance - Legislative reforms are aimed at addressing the "Korean discount," a phenomenon where local stocks are priced below their book value and lower than overseas competitors [4] - The new administration is expected to enhance shareholder rights by revising commercial laws to expand board responsibilities to shareholders [4][5] - There has been a sevenfold increase in activist campaigns targeting companies from 2020 to 2024, indicating growing shareholder impatience [4] Group 3: Corporate Actions and Future Outlook - A total of 160 companies have announced value enhancement plans, although many lack details [6] - KOSPI component companies are projected to increase total dividend payments by 12% in 2024, reaching 44 trillion won ($32.4 billion) [6] - Stock buybacks are expected to more than double in 2024, reaching 18.7 trillion won [6] - Despite challenges, including potential U.S. tariff increases and economic contraction, there is optimism about a cultural shift in corporate governance in South Korea [6]