[Inside Chodong] In the Era of KOSPI 4,000, "Value-up 2.0" Is Urgently Needed

The market is exuberant. The KOSPI has surpassed 4,000, making history, and there are growing voices predicting that the "5,000 era" will soon become a reality. The fear of missing out (FOMO) has reached its peak, with many worried they may be left behind as the rally continues. However, amid this collective fervor, one term has faded into the background: value-up. Just a few months ago, financial authorities and the stock exchange were busy promoting the achievements of one year of value-up at various official events, but now they are preoccupied with highlighting the "KOSPI surpassing 4,000" and "record highs." As several similar events have been held in just a few weeks, some critics are warning, "This is not the time to pop the champagne."

With the structural challenge of the Korea Discount (the undervaluation of the Korean stock market) still unresolved, the current trend of the index soaring makes it clear that now is precisely the time to introduce "Value-up 2.0." This is because policy-driven optimism has an expiration date. Unless the new measures are implemented by the first half of next year at the latest, the current KOSPI rally, which is fueled by policy expectations, may not be sustained. Most importantly, what matters is what new content and reinforcements will be added to the government's new "value-up" initiative, which has promised to usher in the KOSPI 5,000 era.

First, the market points out that leading domestic companies, including Samsung Electronics, are ignoring the value-up program, which aims to encourage listed companies to voluntarily enhance their corporate value. In its first year of implementation, participation by KOSPI small-cap and KOSDAQ companies remained at just around 2 percent. Even considering that the system is newly introduced, this demonstrates a severe lack of efforts to persuade major companies and to support mid-sized and small enterprises that lack disclosure capabilities. If the system design fails to encompass all types of companies, the impact of the value-up program on the overall market will inevitably be limited. The government must keep this in mind. In order to draw participation from large corporations, both the stock exchange and the authorities need to show a much stronger commitment to execution.

Another challenge is the significant "qualitative disparity" in the disclosed content. A senior industry official pointed out, "If you look closely, those who were already doing well continued to do well, while those who were not continued to struggle." Currently, most of the recommendations are voluntary, but authorities must take the lead in ensuring that companies present concrete goals and implementation plans. According to a report from the Daishin Economic Research Institute's ESG Research Center, the stock price boost for companies that disclosed "plans to enhance corporate value" peaked about two months after disclosure and then quickly weakened. The report emphasized that "the clarity of the disclosure and the continuity of execution were key factors," and stressed that "an implementation management mechanism is essential." Specifically, it is particularly important to consider making it mandatory to disclose implementation status at least once a year, or to include the sustainability of such disclosures as an evaluation factor for inclusion in the value-up index, rather than simply whether a disclosure has been made.

The value-up initiative under the Lee Jaemyung administration must become version "2.0" of the program announced by the previous government. The change in administration does not mean that all well-designed frameworks and structures need to be discarded. Charles Wang, a professor at Harvard Business School who has mainly studied corporate governance, recently cited Japan's corporate governance reform-which served as a model for the value-up program-in an interview, emphasizing that continuous and repeated reinforcement, as well as coordination across policy domains, is essential to achieve real change. Korea's value-up 2.0 should retain the strengths of the existing program and improve only where necessary. This is precisely the pragmatism that the new government has been emphasizing.

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