Mirae Asset: Holding Company, Securities, and Dividend ETFs to Benefit from Mandatory Treasury Share Cancellations

In line with the government's capital market reform policies, major listed companies by market capitalization are increasingly engaging in share buybacks and cancellations. There are projections that the investment appeal of the domestic stock market will grow if policies such as mandatory treasury share cancellations and protection of minority shareholders during parent company spin-offs are implemented.

Jung Hyunjeon, Head of ETF Management at Mirae Asset Global Investments, stated in a webinar on September 26, "The core goal of the government's policy is to advance the stock market and achieve KOSPI 5000."

He added, "Amendments to the Commercial Act are strengthening safeguards for minority shareholders," and continued, "This will also include measures such as the activation of cumulative voting, institutionalizing treasury share cancellations for listed companies, and preferential allocation of new shares to minority shareholders of parent companies in the event of split-off listings."

He said, "Among the policies not yet implemented, mandatory treasury share cancellations and protection of minority shareholders during parent company spin-offs are also expected to proceed rapidly," adding, "These measures will likely have the effect of increasing the value of issued shares."

Jung recommended the following ETFs as likely beneficiaries: TIGER Holding Companies, TIGER Securities, TIGER Korea Dividend Dow Jones, and TIGER Bank High Dividend Plus TOP10 ETF.

He explained, "The TIGER Holding Companies ETF is the only holding company ETF in the domestic stock market," and noted, "The price-to-book ratios (PBR) of major domestic holding companies remain below 1, making them the first group of stocks to attract attention when the domestic market overcomes its undervaluation."

He further analyzed, "If mandatory treasury share cancellations are implemented, securities stocks are expected to respond strongly," and added, "The government is not only pursuing capital market reforms but also plans to expand tax credits for national strategic technology R&D, signaling a boost for venture investment." He also suggested that "the revitalization of venture investment could benefit securities companies," and proposed the TIGER Securities ETF as a promising investment vehicle.

He also predicted that interest in high-dividend ETFs would increase in line with the trend of treasury share cancellations, recommending the TIGER Korea Dividend Dow Jones and TIGER Bank High Dividend Plus TOP10 ETFs.

This content was produced with the assistance of AI translation services.