KRX Chairman: South Korea’s Chip Sector Concentration ‘Natural,’ Market Discount Easing Amid Foreign Investor Reforms
Jeong Eun-bo, Chairman of the Korea Exchange (KRX), stated Monday that the significant concentration of investment in South Korea’s semiconductor industry is a “natural” market outcome. This assessment takes into account various contributing factors, including the robust operating profits of leading companies like Samsung Electronics Co. and SK hynix Inc.
“I believe this market concentration reflects a natural price-setting process, fundamentally driven by supply and demand dynamics and considering a multitude of market factors,” Chairman Jeong Eun-bo elaborated during a press conference for foreign media in Seoul.
These remarks from the head of South Korea’s stock exchange operator address ongoing concerns regarding potential volatility within the domestic market. Such worries stem from the combined market capitalization of Samsung and SK hynix exceeding 50 percent of the total value of all companies listed on the benchmark Korea Composite Stock Price Index (KOSPI).
Highlighting valuation, Jeong noted, “The forward-looking price-to-earnings ratio (PER) for Samsung and SK hynix, based on expected revenue, is projected to be around 7 to 8. In comparison, the PER for international peer Micron Technology Inc. stands above 10.”
Chairman Jeong further cautioned that it is premature to categorize the current surge in semiconductor stock performance as “speculation.” He emphasized that the South Korean government is actively implementing measures to “smooth out” and stabilize such market movements, fostering a more balanced investment environment.
During the same conference, Jeong Eun-bo also confirmed that the persistent “Korea discount” — the undervaluation often associated with South Korean equities — is “significantly” easing. This positive development is underpinned by the enhanced global competitiveness of the nation’s key industries and concerted efforts to boost investor trust within the South Korean market, notably through the government’s corporate “value-up program.”
As part of this “value-up” initiative, the Korea Exchange (KRX) has been proactively working to swiftly delist insolvent companies, prevent instances of dual listings, and effectively eliminate unfair trading practices. These actions aim to bolster market integrity and protect investors.
Furthermore, Jeong highlighted ongoing efforts by the KRX to attract greater overseas liquidity and enhance accessibility for international investors. Key initiatives include the recent introduction of omnibus accounts specifically for foreign investors and the extension of operating hours for South Korea’s derivatives market. By next year, the Korea Exchange is also set to mandate English-language regulatory disclosures for all KOSPI-listed companies, a strategic move to significantly improve transparency and ease of access for the global investment community.
