Caution Against Korea Exchange CEO’s Optimism on KOSPI
CEO Cheong hosting the KOSPI 5,000 seminar with champagne, is the same person who opposed the Commercial Act amendment eight months prior
A KOSPI 5,000 is in the offing, with both 6,000 and 3,000 scenarios possible in 2026, depending on the progress of CG reform
Foreigners may lead sell-off, if the pace of CG reform decelerates and fail to satisfy investor expectations
The Lee administration must reinstate the value-up program with enforcement, not just voluntary guidelines
Combination of top-down (ie, rule-based CG legislation) and bottom-up (revitalized value-up program) approaches are required in Korea as chaebol resistance is fierce
Samsung Electronics is projected to exceed W100 trillion (US$70billion) in operating profit by 2026, (and given Samsung Electronics’ dominant weighting in the KOSPI) suggesting the KOSPI 5,000 level is attainable, provided there is no sharp decline in U.S. stock markets. This optimistic near-term outlook is, however, offset by significant structural uncertainty, as even semiconductor experts find forecasting beyond 2027 is challenging. Korea's industrial structure causes it to exhibit the highest earnings volatility in the world. This inherent low predictability, combined with backward corporate governance practices, serves as a key contributing factor to the persistent Korea Discount.
Following a potential KOSPI 5,000 breakout, the index faces a highly diverted scenario where 6,000 or 3,000 are both plausible outcomes in 2026, in our opinion. Should the semiconductor profit cycle peak in late 2026 or early 2027, the KOSPI is likely to peak 6~12 months prior to that event. If the momentum for corporate governance reform, initiated by the Commercial Act amendment, decelerates and subsequent legislation fails to meet the market's now very high expectations, the index could experience a sharp sell-off in the first half of 2026, driven by foreign selling pressure amid concerns over the peaking semiconductor cycle.
This is a moment demanding heightened vigilance and strategic focus, in our view. IMF Managing Director Kristalina Georgieva, during her early November visit, explicitly instructed Korea to "continue the bold structural reforms seen to date." This global call for a change is echoed by the recent Nobel Prize in Economics, awarded to Joel Mokyr, Philippe Aghion, and Peter Howitt for their foundational work linking innovation directly to sustained economic growth. As Korea faces the imperative to simultaneously drive structural reform, corporate restructuring, and innovation, the present is absolutely not the time for complacency or premature celebration over hitting KOSPI 4,000.
The Korea Exchange (KRX) hosted a "Seminar for the Leap into the KOSPI 5,000 Era" on November 11th, specifically focusing on the assessment and future direction of the value-up Program. This follows a highly similar "Market Experts Meeting for the Leap into the KOSPI 5,000 Era" hosted by KRX CEO Jeong Eun Bo just two weeks prior, on October 30th. Rather than continuing to organize a stream of promotional events lacking substantive policy outcomes, the CEO's time would be better spent engaging in direct dialogue: specifically, meeting this week with the CEO of Samsung Electronics, a critical benchmark company that has yet to publicly disclose its value-up plan, in an effort to secure meaningful corporate participation.
CEO Jeong is on record opposing key governance reform just eight months ago. Specifically, an interview published on February 26th of this year in a major local economic newspaper, reported his stance against the Commercial Act amendment, which mandates director's fiduciary duty to shareholders (in addition to the company) and was unilaterally advanced by the opposition party (now the current ruling party). Jeong "voiced his opposition, cautioning that 'side effects should not arise from excessive greed,'" thereby highlighting his previous reservation regarding strengthening shareholder rights.
The value-up program has yet to achieve success. Despite external experts creating an excellent template in May 2024, the initiative has been very disappointing due to a perceived lack of leadership and execution from the Exchange. This weakness is highlighted by the fact that Samsung Electronics, the nation's dominant listed firm, has yet to disclose its value-up plan. Furthermore, several LG affiliates have submitted subpar plans. In 2024, the Forum assigned an F-grade grade to LG Electronics’ plan. One must seriously question the sincerity and frequency with which Chairman Jeong and other Exchange executives have engaged in direct, persuasive 1-1 meetings with these corporate managements to secure robust value-up plan announcements.
Investors' enthusiasm for Japan's corporate governance reform stems primarily from the decisive leadership of Yamaji Hiromi, the CEO of the Japan Exchange Group (JPX) and a former Nomura Securities IB chief. Yamaji strategically designed Japan's corporate governance "Action Program" to focus its efforts not solely on corporate management, but on the boards, aiming to fundamentally alter the often complacent and customary attitudes of executives. Crucially, Yamaji ensured the program's effectiveness through intense, direct engagement with listed company executives to strongly compel their participation in the value-up initiatives.
We urge the Lee administration's re-launch the value-up program, targeting all listed companies. This initiative should be timed to coincide with the anticipated passage of the 3rd Commercial Act amendment and the intensified debate on Stewardship Code revisions (projected for Q1 2026). Critically, this iteration must feature compulsory measures to ensure universal participation. The plans must be mandated to address core concepts essential for resolving the Korea Discount, including shareholder rights, investor protection, board independence, cost of capital, and capital allocation. Furthermore, mandatory, in-person corporate governance education for both executive and independent directors is indispensable. The successful integration of top-down legislative mandates (via the National Assembly) and bottom-up execution (through comprehensive plans and practical actions by individual listed companies) will enable a substantial leap forward for Korea's capital markets.
Caution Against Korea Exchange CEO’s Optimism on KOSPI
CEO Cheong hosting the KOSPI 5,000 seminar with champagne, is the same person who opposed the Commercial Act amendment eight months prior
A KOSPI 5,000 is in the offing, with both 6,000 and 3,000 scenarios possible in 2026, depending on the progress of CG reform
Foreigners may lead sell-off, if the pace of CG reform decelerates and fail to satisfy investor expectations
The Lee administration must reinstate the value-up program with enforcement, not just voluntary guidelines
Combination of top-down (ie, rule-based CG legislation) and bottom-up (revitalized value-up program) approaches are required in Korea as chaebol resistance is fierce
Samsung Electronics is projected to exceed W100 trillion (US$70billion) in operating profit by 2026, (and given Samsung Electronics’ dominant weighting in the KOSPI) suggesting the KOSPI 5,000 level is attainable, provided there is no sharp decline in U.S. stock markets. This optimistic near-term outlook is, however, offset by significant structural uncertainty, as even semiconductor experts find forecasting beyond 2027 is challenging. Korea's industrial structure causes it to exhibit the highest earnings volatility in the world. This inherent low predictability, combined with backward corporate governance practices, serves as a key contributing factor to the persistent Korea Discount.
Following a potential KOSPI 5,000 breakout, the index faces a highly diverted scenario where 6,000 or 3,000 are both plausible outcomes in 2026, in our opinion. Should the semiconductor profit cycle peak in late 2026 or early 2027, the KOSPI is likely to peak 6~12 months prior to that event. If the momentum for corporate governance reform, initiated by the Commercial Act amendment, decelerates and subsequent legislation fails to meet the market's now very high expectations, the index could experience a sharp sell-off in the first half of 2026, driven by foreign selling pressure amid concerns over the peaking semiconductor cycle.
This is a moment demanding heightened vigilance and strategic focus, in our view. IMF Managing Director Kristalina Georgieva, during her early November visit, explicitly instructed Korea to "continue the bold structural reforms seen to date." This global call for a change is echoed by the recent Nobel Prize in Economics, awarded to Joel Mokyr, Philippe Aghion, and Peter Howitt for their foundational work linking innovation directly to sustained economic growth. As Korea faces the imperative to simultaneously drive structural reform, corporate restructuring, and innovation, the present is absolutely not the time for complacency or premature celebration over hitting KOSPI 4,000.
The Korea Exchange (KRX) hosted a "Seminar for the Leap into the KOSPI 5,000 Era" on November 11th, specifically focusing on the assessment and future direction of the value-up Program. This follows a highly similar "Market Experts Meeting for the Leap into the KOSPI 5,000 Era" hosted by KRX CEO Jeong Eun Bo just two weeks prior, on October 30th. Rather than continuing to organize a stream of promotional events lacking substantive policy outcomes, the CEO's time would be better spent engaging in direct dialogue: specifically, meeting this week with the CEO of Samsung Electronics, a critical benchmark company that has yet to publicly disclose its value-up plan, in an effort to secure meaningful corporate participation.
CEO Jeong is on record opposing key governance reform just eight months ago. Specifically, an interview published on February 26th of this year in a major local economic newspaper, reported his stance against the Commercial Act amendment, which mandates director's fiduciary duty to shareholders (in addition to the company) and was unilaterally advanced by the opposition party (now the current ruling party). Jeong "voiced his opposition, cautioning that 'side effects should not arise from excessive greed,'" thereby highlighting his previous reservation regarding strengthening shareholder rights.
The value-up program has yet to achieve success. Despite external experts creating an excellent template in May 2024, the initiative has been very disappointing due to a perceived lack of leadership and execution from the Exchange. This weakness is highlighted by the fact that Samsung Electronics, the nation's dominant listed firm, has yet to disclose its value-up plan. Furthermore, several LG affiliates have submitted subpar plans. In 2024, the Forum assigned an F-grade grade to LG Electronics’ plan. One must seriously question the sincerity and frequency with which Chairman Jeong and other Exchange executives have engaged in direct, persuasive 1-1 meetings with these corporate managements to secure robust value-up plan announcements.
Investors' enthusiasm for Japan's corporate governance reform stems primarily from the decisive leadership of Yamaji Hiromi, the CEO of the Japan Exchange Group (JPX) and a former Nomura Securities IB chief. Yamaji strategically designed Japan's corporate governance "Action Program" to focus its efforts not solely on corporate management, but on the boards, aiming to fundamentally alter the often complacent and customary attitudes of executives. Crucially, Yamaji ensured the program's effectiveness through intense, direct engagement with listed company executives to strongly compel their participation in the value-up initiatives.
We urge the Lee administration's re-launch the value-up program, targeting all listed companies. This initiative should be timed to coincide with the anticipated passage of the 3rd Commercial Act amendment and the intensified debate on Stewardship Code revisions (projected for Q1 2026). Critically, this iteration must feature compulsory measures to ensure universal participation. The plans must be mandated to address core concepts essential for resolving the Korea Discount, including shareholder rights, investor protection, board independence, cost of capital, and capital allocation. Furthermore, mandatory, in-person corporate governance education for both executive and independent directors is indispensable. The successful integration of top-down legislative mandates (via the National Assembly) and bottom-up execution (through comprehensive plans and practical actions by individual listed companies) will enable a substantial leap forward for Korea's capital markets.
November 13th, 2025
Korean Corporate Governance Forum
Chairman, Namuh Rhee