South Korean stocks extend gains after country moves to ban double listings

South Korean equities surged after the government moved to prohibit publicly traded corporations from listing specific subsidiaries—a practice long accused of eroding shareholder value.Following the announcement of fresh steps by Financial Services Commission Chairman Lee Eog-weon at an investor meeting in Seoul on Wednesday, the benchmark Kospi jumped as much as 5%, extending gains for a third session.

In an effort to reduce volatility, programme trading was also halted following a more than 5% increase in Kospi 200 futures.
“Double listings” are generally seen as a structural reason for Korea’s ongoing equity undervaluation, sometimes known as the “Korea discount,” and they tend to lower holding company shares. The government hopes to increase market value and close the gap with international competitors by outlawing them.
Also Read: Persistent Systems, Coforge are CLSA’s top IT sector picks for up to 78% upsideAffiliate IPOs have been a major source of funding for many chaebols. However, fewer robust business units are likely to split off into independent companies as a result of new regulations limiting affiliate listings.

Earlier this week, local news about the idea caused shares of holding firms, such as CJ Corp. and SK Inc., to rise. IPO plans for affiliates at significant chaebols like SK, HD Hyundai, and Hanwha Group may be impacted by the legislation. CJ’s stock increased by 8.8% on Wednesday, while SK’s increased by 3.8%.

The 2022 IPO of LG Energy Solution is frequently used as an example. At the height of the electric vehicle boom, LG Chem broke out the rapidly expanding battery division. The parent company’s shares then dropped roughly 9% in the next month before going into a protracted