SEOUL (Reuters) -South Korea’s financial watchdog chief vowed to root out unfair practices and establish a market order in which the rights of minor shareholders are respected, as he took office on Thursday, amid investor hopes of market reforms.
The appointment of a new watchdog chief comes as the government has pledged a series of market reforms in a country trying to tackle a so-called “Korea discount”, which refers to a tendency for local companies to have lower valuations than global peers due to factors such as low dividend payouts and the dominance of opaque conglomerates known as chaebols.
“Companies should adopt shareholder value-oriented, fair governance systems,” Lee Chan-jin, governor of the Financial Supervisory Service, said in his inauguration speech.
“I will establish a market order in which the rights and interests of both major and regular shareholders are equally respected,” Lee said.
Lee also vowed to respond firmly to market-disturbing behaviour, such as stock price manipulation and abuse of monopolistic power, under a principle of zero tolerance.
Governor Lee was appointed by President Lee Jae Myung, who has pledged various market reforms under his “KOSPI 5,000” initiative, including a legislative amendment aimed at better protecting shareholder rights, since taking office on June 4.
The benchmark KOSPI stock index hit a four-year high of 3,254.47 points in a post-election rally last month, before government tax hike proposals triggered investor scepticism over its market reform push.
Governor Lee is a lawyer and a former classmate of President Lee during their judicial service training and represented the liberal president when he faced legal challenges, according to media reports.
The newly appointed FSS chief succeeds Lee Bok-hyun, whose term ended in June. The former governor also had a legal background as a prosecutor before being appointed to the role, which is usually held by finance officials.
(Reporting by Jihoon LeeEditing by Ed Davies)
