The small investors of South Korea try to upgrade the country’s creaking corporate landscape.
Amateur-stock pickers across the country gather on the social media platform cocoa talk and committed shareholders like Act, which have achieved more than 110,000 users in the two years since its start. Your goal: to give a jerk on the 1.9 trillion dollars in Korea, which has been trading on cheaper multipliers for years than regional rivals such as Japan and Taiwan.
“The financial system in Korea was the account of global standards and companies,” said Younghee Won, a 66-year-old art teacher and amateur investor. “Online platforms enable our anger to translate into action.”
This wave of basic activism means that Korean companies are now under pressure from all sides, since politicians, supervisory authorities and foreign investment funds are increasing a better government. After all, this can force local companies to discuss the long -term “Korea discount” – Fuel on a stock exchange that is already one of the world’s best artists this year.
It has also made small investors a surprising political force. Lee Jae-Myung, the left-wing politician who won the country’s presidential elections last week, tried to position himself as a champion for shareholders. promising In order to increase company -government standards, to contain stock manipulation and set the Kospi index to 5,000 -almost 80% higher than its current level.
The Kospientered a bull marketAfter Lee’s election victory and was 1.7% higher on Monday in early Asian trade.
The market increases an increase in foreign funds that are loaded on shares and increasing optimism from Wall Street. Goldman Sachs Group Inc. Strattegen said in a weekend note that they had Korean stocks overweight of neutral, which indicates the increased probability of reforms of the capital market.
Growing punch
According to Goldman Sachs, retail investors in Korea make up almost 30% of the total population. A boom in stock trading during the Covid 19 pandemic led to millions of new account openings, which started the rise of online communities in which they could learn about the selection of shares-and plans.
The shareholders of Korean companies submitted 168 proposals in the last round of the annual general sessions, a jump of more than 80% compared to 2021, according to the AJU Research Institute of Corporate Management. This included 78 suggestions that aim directly at management and request the appointment or removal of managers.
“The shareholders of minorities are looking for a more active role in corporate governance,” said Nameun Kim, deputy director of the AJU. “If the focus was previously only on returns, you would now like your preferred directors on the board so that you can participate in management decisions.”
So far, the success of small investors has come to small companies with a market value of 1 billion US dollars or less. During the last round of the general general sessions in March, the medical company Oscotec Inc. scraped again after the recoil of investors, while the biotechnology company AMICOGE INC and the textile company di Dong IL Corp. New examiners were appointed after small investors have been pushed for it.
Oscotec, Amicogen and Di Dong Il Corp. did not respond to inquiries about comments.
It is not surprising that many companies do their best to resist these mini activists or simply ignore them. Kim, a school teacher who only wanted to be identified by his surname, was so frustrated by a Korean company, whose shares he believed that he sent 400 letters to co -investors he had found in the shareholder registration of the company, and asked to join him in a Kocaotalk group to discuss possible measures. More than 120 of them have registered.
“I had to print and email everyone by hand,” he said. “I did everything outside of working time myself, while I maintain a full -time job. The shareholder activism is exhausting, frustrating and frankly overwhelming.”
The company did not respond to Kims numerous inquiries about clarity about its business performance and sold most of its share. He adhered to a few stocks from a feeling of commitment to his co -activist.
The rise of small investors in Korea differs from the Meme standard mania In the United States, where anonymous users worked together in the Reddit Wall Streetbets Forum to the price of Gamestop Corp. and increase other stocks. Korean platforms such as Act and Hey Holder require users to confirm that they actually hold shares before they can join a committed group, which means that those who weigh in discussions already have skin in the game.
Sangmok Lee, CEO from Act, said that users often behave more like “fans” on their platform. “The fans take part out of love for love, similar to the parents who use discipline out of love,” said Lee.
Mighty allies
The Korea’s stock market has been cheaper for years than the close competitors Japan and Taiwan, when it comes to metrics like the price-book ratio, a popular level of how much a share is worth compared to the value of a company’s assets. The “Korea discount” has no matter, but analysts refer to worries about how companies invest, a intricate series of cross shares and the feeling that the interests of the managers of companies do not always match their shareholders.
Small investors will not be enough to turn things around, but they have some powerful allies. Local activist funds such as Align Partners Capital Management Inc. are on the rise and give the efforts of amateur investors professionally. Foreign funds will also go into the plot and expand their business in Korea, in the hope that the market is finally ready to bend around a corner.
“We are optimistic that the presidential elections in South Korea will make even more extensive changes”Bloomberg TelevisionInterview. He added a precaution and said there was still a “long, long way” to reform the Korean corporate sector.
But the largest source of support from little investors can come from the top. In a Facebook contribution before his election victory, Lee Jae-Myung promised to protect investors’ interests, promote transparency and to make companies appoint directors who represent the minority shareholders.
His goal? Transform the “Korea discount” into a “Korea bonus”.
This story was originally on Fortune.com
