Global Investors Are Buying Korean Stocks Again – Is It Time for You to Act?

After years of underperformance, South Korea’s stock market is back in the spotlight. Global investment firms, such as Aberdeen Investments, Franklin Templeton, and Pictet Wealth Management, are increasing their exposure to Korean stocks as the new government promotes stronger shareholder rights, enhanced corporate governance, and improved capital returns.

President Lee Jae-myung’s administration has made shareholder reform a top priority. Investors are now watching closely to see if these changes can narrow the long-standing “Korea discount” – the tendency for Korean companies to trade at lower valuations compared to their global peers due to weak minority protections and opaque corporate practices.

Foreign Investors Are Coming Back

The Composite Stock Price Index, KOSPI in short, entered a bull market on Lee’s first day in office. According to Korea Exchange data, dividend payouts from Kospi-listed firms rose 12% in 2024 to 44 trillion won, while share buybacks more than doubled to 18.7 trillion won. Some companies are also revising capital plans. Hanwha Aerospace Co., for example, reduced a planned share sale after investor concerns over dilution.

What’s Changing?

Reform efforts focus on giving shareholders more influence. Proposed legislation would: Expand board duties to prioritize shareholders, strengthen audit committee nominations, and support electronic voting and virtual shareholder meetings.

These steps are part of the “Corporate Value-Up” program, modeled after Japan’s governance reforms. Around 160 companies have submitted Value-Up plans, though many remain vague. Global investors hope future versions will be more detailed and enforceable.

Global Confidence Rises

Aberdeen’s Asia ex-Japan fund turned overweight on Korea in May. JPMorgan (JPM) Asset Management and Franklin Templeton have also increased their holdings, citing low valuations and early signs of real change. For retail investors, this could be a signal to take a closer look at key Korean stocks, especially those showing improved governance and stronger capital return policies.

Notable Stocks to Watch

• Samsung Electronics (SMSN): Korea’s largest firm, with global exposure and strong analyst coverage
• SK Hynix: Memory chip maker positioned to benefit from both AI trends and reform tailwinds
• LG Chem: EV battery supplier gaining traction in global markets
• Hanwha Aerospace: Recently revised equity plans in response to investor concerns
• Hyundai Motor (HYMLF): Potential upside from both reform momentum and EV transition

The Outlook

Challenges remain. Inheritance and dividend tax reform is still under debate, and Korea faces trade risks and economic headwinds. However, with strong political backing and rising global interest, investors are watching closely.

As most companies (besides Samsung and Hyundai), do not appear on Wall Street. We’ve created an alternative general chart to showcase the stocks mentioned in the article:

_{Source: Tipranks}