"Korea Premium Faces Many Challenges... ESG Disclosure and Consumer Rights Strengthening Needed"

As the KOSPI continues to hit all-time highs, raising expectations for a leap toward the so-called "Korea Premium," experts have suggested that, for these hopes to bear fruit, it is essential to mandate ESG (Environmental, Social, and Governance) disclosures and strengthen the rights of financial consumers in line with the standards of international investors.

At the 'Korea Capital Market Conference 2025' held at the Westin Chosun Seoul on the 29th, experts who spoke as panelists noted that expectations for structural reform in the capital market have been rising since the launch of the new administration, expressing optimism about the long-term trajectory of the KOSPI index. They evaluated that expanding the scope of directors' fiduciary duties and promoting value-up (corporate value enhancement) programs in a market where minority shareholders' rights have traditionally been limited demonstrates that the right direction for reform has been set.

Eunbo Jeong, Chairman of the Korea Exchange, is performing a KOSPI 5000 wish performance with attendees at the opening ceremony of the Korea Capital Market Conference hosted by the Exchange on the 29th at the Western Chosun Hotel in Jung-gu, Seoul. Photo by Yonhap News

Mixso Das, Asia Equity Strategist at JP Morgan, stated, "Globally, interest rate cuts are becoming more widespread, and strong earnings are expected from Korean companies this year," adding, "I believe the KOSPI 5000 can be achieved easily."

However, the consensus among experts is that there are still many challenges to overcome in order to fully dispel the longstanding distrust that foreign investors have toward the Korean capital market.

Nathan Fabian, Chief Sustainable Systems Officer (CSSO) at the United Nations Principles for Responsible Investment (UN PRI), who delivered the keynote speech, emphasized, "Like Japan, Singapore, and the United Kingdom, Korea should revise its stewardship code so that companies can consider not only traditional financial performance but also ESG, which determines future value, as performance factors." He added, "This will reduce transaction costs for foreign investors and provide a fair information environment, thereby enhancing international investors' trust in the Korean capital market."

Fabian also noted, "Given that Korea's export-dependent economy is exposed to both physical and transition risks related to climate, the government's commitment to strengthening sustainability disclosures is very welcome." He argued, "It is necessary to adopt the S1 (General) and S2 (Climate) disclosure standards of the International Financial Reporting Standards (IFRS) as the baseline for mandatory domestic reporting." In IFRS climate disclosures, physical risks refer to risks arising from physical climate changes such as extreme weather events to which companies are exposed, while transition risks refer to risks resulting from changes in policies, technologies, and markets in response to these climate changes.

Kim Sewan, President of the Korea Capital Market Institute, is delivering the keynote speech at the 'Korea Capital Market Conference 2025' held at the Westin Chosun Seoul on the 29th. Photo by Kim Jinyoung

Kim Sewan, President of the Korea Capital Market Institute, focused on the systems that need to be supplemented following the revision of the Commercial Act. Kim stated, "To enable bold innovation and investment, it is necessary to protect board management decisions and, while reducing criminal penalties for breach of trust, strengthen civil liabilities instead." He emphasized the need to: ▲ restrict the use of treasury shares to strengthen corporate control, ▲ enhance shareholder rights to appoint directors and approve compensation, ▲ eliminate discrimination against foreign investors, and ▲ improve financial accessibility for the elderly.

Kim further pointed out, "As unfair trading methods evolve and the environment for financial products becomes more complex, the likelihood of investors suffering losses is also increasing." He stressed, "To ensure that investors can trust the capital market, it is necessary to strictly punish stock price manipulation through a reformed unfair trading investigation system and to establish an investor protection center to provide remedies for losses."

Meanwhile, this year's conference, now in its second year, was organized to facilitate communication among domestic and international market participants and to strengthen the global competitiveness and development of the Korean capital market.

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