Shares of South Korean holding companies, which had rallied in anticipation of policy benefits under the new administration, declined sharply in early trading on July 4 as investors moved to lock in gains following the passage of the Commercial Act amendment.
As of 9:42 a.m., shares of HS Hyosung (487570) were down 9.83% at 78,000 won, after having dropped more than 10% at one point during intraday trading.
Other holding company stocks also showed broad weakness: Kolon (002020) fell 8.97%, Poongsan Holdings (005810) retreated 3.69%, Hanwha (000880) slipped 3.42%, LG (003550) lost 2.87%, Doosan (000150) was down 2.78%, DB (012030) fell 2.68%, and SK (034730) declined 1.94%.
These stocks had risen in recent weeks on expectations of policy tailwinds from the new administration. However, with the National Assembly’s passage of the Commercial Act amendment the previous day, investors appear to have seized the opportunity to take profits.
The amended Commercial Act includes provisions that expand directors’ fiduciary duties from solely “the company” to “the shareholders and the company.” It also introduces electronic shareholder meetings and enforces the so-called “3% rule,” which limits the voting rights of controlling shareholders in the appointment of audit committee members.
Shares of South Korean holding companies, which had rallied in anticipation of policy benefits under the new administration, declined sharply in early trading on July 4 as investors moved to lock in gains following the passage of the Commercial Act amendment.
As of 9:42 a.m., shares of HS Hyosung (487570) were down 9.83% at 78,000 won, after having dropped more than 10% at one point during intraday trading.
Other holding company stocks also showed broad weakness: Kolon (002020) fell 8.97%, Poongsan Holdings (005810) retreated 3.69%, Hanwha (000880) slipped 3.42%, LG (003550) lost 2.87%, Doosan (000150) was down 2.78%, DB (012030) fell 2.68%, and SK (034730) declined 1.94%.
These stocks had risen in recent weeks on expectations of policy tailwinds from the new administration. However, with the National Assembly’s passage of the Commercial Act amendment the previous day, investors appear to have seized the opportunity to take profits.
The amended Commercial Act includes provisions that expand directors’ fiduciary duties from solely “the company” to “the shareholders and the company.” It also introduces electronic shareholder meetings and enforces the so-called “3% rule,” which limits the voting rights of controlling shareholders in the appointment of audit committee members.