Since the second half of last year until January this year, the KOSPI index, which had been sluggish, has resumed its upward trend as if nothing had happened. From the 11th to the 19th of this month, it rose for seven consecutive trading days, recovering the 2,670 level. Samsung Electronics, the leading stock in the KOSPI, has also approached 60,000 won, overcoming the disgrace of concerns about '40,000 won Electronics.' It makes one wonder if this is really the Korean stock market, which felt like escape was the only answer until recently. I can only hope this trend continues.
However, these days, financial authorities are said to feel a bit of regret towards the prosecution. Why is that? Let's turn the clock back to the last day of January. It was the day when Samsung Fire & Marine Insurance, a KOSPI-listed company, voluntarily announced its corporate value enhancement plan, being the first among Samsung Group affiliates. Samsung Fire & Marine Insurance stated, "We will expand the shareholder return rate to 50% by 2028 and reduce the proportion of treasury stock to less than 5%."
January 31 was a Friday. The following Monday, February 3, was scheduled for the appeals trial verdict hearing regarding the unfair merger and accounting fraud allegations against Lee Jae-yong, chairman of Samsung Electronics. Since he had already been found not guilty in the first trial, public opinion was leaning towards a high possibility of acquittal in the appeals trial as well. Consequently, the prevailing atmosphere among financial authorities was to interpret Samsung Fire & Marine Insurance's announcement right before the appeals trial as a signal for Samsung Group's value enhancement announcements.
As expected, Chairman Lee received a not guilty verdict in the appeals trial as well. At that time, financial authorities were probably hoping for a scenario like 'first mover Samsung Fire & Marine Insurance's value enhancement announcement → Chairman Lee's not guilty verdict in the appeals trial → Chairman Lee's return as a registered director and normalization of management → additional value enhancement announcements from Samsung Group.'
However, the subsequent situation unfolded in a direction that financial authorities did not anticipate. The prosecution appealed to the Supreme Court. In response to criticisms that the not guilty verdicts in both the first and appeals trials indicated "an unreasonable investigation," the prosecution appeared to be more cautious about whether to proceed with the appeal. Public opinion predicted the withdrawal of the appeal, but the prosecution decided to appeal after a review by a committee composed of external commissioners. Consequently, the judicial risk that seemed to be resolved for Chairman Lee resurfaced.
Samsung Electronics will hold its regular shareholder meeting on the 19th of next month at the Suwon Convention Center in Gyeonggi Province. The agenda to appoint the chairman as an internal director, whose judicial risk has not been fully resolved, was ultimately not included this time either. The expected follow-up value enhancement announcements from Samsung Group have not materialized after Samsung Fire & Marine Insurance.
Just because Samsung Group makes a value enhancement announcement, it does not necessarily mean that stock prices will rise, nor does it mean they will fall if they do not. However, for financial authorities, which must somehow push forward with the value enhancement policy, they have no choice but to wait for the leading stocks to step up. Especially at a time when the Korean stock market shows signs of revival.
Financial authorities hope that Samsung Group will actively participate in the value enhancement policy, regardless of whether Chairman Lee's judicial risk is resolved. As we all know, announcements are not the end but the beginning. Samsung is likely aware of this as well.