Election result
The result of the Korean presidential election came in just as this newsletter went to press. Metrica was pleased to see Lee Jae-myung win the race by a comfortable margin. Mr. Lee’s campaign platform included a large number of pledges to improve Korea’s corporate governance and stock market functioning, including: ... more
Japanese MBOs and parent-subsidiary listings
It is proving to be a very busy year for Asia-Pacific M&A, with the number of deals on track to exceed 300, comfortably exceeding the previous peak of 242 (figure below). Hong Kong, Singapore and Japan have shown the greatest leaps in activity, with run rates of 3.5x, 3.0x and 2.1x the post-2009 average, respectively. ... more
A pathway to stability
The long-awaited impeachment trial verdict in Korea is due the day after this newsletter goes to press. ... more
Korea reform
Korea’s government and main opposition party continue to push their respective stock market and corporate governance reform agendas. The vice-chairman of the Financial Services Commission (FSC) appeared at several conferences in February to highlight the government’s continued commitment to “Value-up”. On one measure – share buybacks – Value-up is already proving to be a success, with Korean companies increasing buybacks by 72.8% year-on-year to $9.8 billion in 2024. However, both the FSC and Korea Exchange want to boost the number of listed firms releasing general Value-up plans beyond the current 114. ... more
Korea stewardship code
In line with our continued commitment to the Asian markets and our dedication to fulfilling our stewardship responsibilities, we have initiated the process of registering Metrica as a participant in the Korea Stewardship Code. ... more
Seeds of doubt
RV spreads have been drifting wider since May 2024, and on one measure – the ratio between MSCI Value and Growth indices – levels are now back to multi-year extremes (figure below). ... more
Looking ahead
Event-driven outlook
We begin 2025 with a survey of current opportunities in Metrica’s core strategies.
Firstly, in the event-driven (hard catalyst) strategy, one of the key performance drivers is the liquidity of the target universe, as it correlates with the frequency and depth of trading opportunities. ... more
Is this it? part II
Investors in Hong Kong and mainland Chinese stocks have been waiting a long time for the market to stop falling. In April we saw the beginnings of a tentative rebound, spurred by the announcement of shareholder-friendly reforms by the China Securities Regulatory Commission and positive macro / earnings headlines, but hopes were dashed soon after as the rally lost steam. ... more
Value-up index announced
Korea Exchange released the details of its long-awaited Korea Value-up index.
As expected, not one non-financial holding company was included in the index, although many listed subsidiaries were. This was not a surprise to us, as we have not seen wholehearted participation in Corporate Value-up (CVU) by any of the nonfinancial holding companies with the exception of LG Corp. We expect this to change over time following pressure by investors, regulators and the stock exchange. ... more
Gentle persuasion
Korea continues to be a key focus. Foreign investors are still generally quite sceptical on the prospects for the Value-up programme, with fewer than 30% expecting it to have a meaningful impact Principal reasons are the perceived inability of the government to pass legislation due to its minority position combined with the structural impediment of an equity market dominated by majority shareholders that seemingly don’t care about share prices. ... more