In a strategic move to bolster the financial markets, the South Korean government has announced a six-month postponement of the planned increase in the market capitalization thresholds for delisting from KOSPI and KOSDAQ. Originally set to take effect in January, these changes will now be implemented in July. This decision reflects the government’s recognition of the need for a more gradual approach to ensure market stability during a challenging economic climate.
During a recent market situation assessment meeting led by Deputy Prime Minister and Minister of Economy and Finance, Ku Yun-cheol, the officials discussed the current state of domestic and international financial and real estate markets, along with the latest trends affecting the KOSDAQ market. The meeting included key figures such as the Financial Services Commission Chairman and representatives from the Bank of Korea, all of whom are closely monitoring the evolving landscape of the financial sector.
The government and the Korea Exchange are determined to expedite the exit of underperforming companies from the market while also addressing the concerns raised by industry stakeholders regarding the recent downturn in the KOSDAQ. The initial proposal aimed to increase the delisting thresholds from 200 billion won to 500 billion won for KOSPI and from 150 billion won to 300 billion won for KOSDAQ. However, following feedback from the business community, the government opted to delay these adjustments to allow for a more comprehensive recovery period for the markets.
As part of this revised strategy, companies that have been designated as management items due to failing to meet the market capitalization criteria will now have the opportunity to transition to the KONEX market without undergoing a trading suspension, provided they meet specific financial requirements. This move is seen as a way to mitigate the potential shock of delisting and offer a lifeline to struggling companies.
The criteria for transitioning to KONEX will apply to businesses that have been classified as management items due to their market capitalization falling below the required threshold after July 1. These companies must demonstrate that they meet one of the following conditions: either showing positive operating profit in two out of the last three fiscal years or recording a profit in one of the past three years while maintaining equity of at least 20 billion won. However, companies experiencing capital impairment will be excluded from this provision.
This initiative aims to ensure that eligible companies can maintain their existing market prices while facilitating a smoother transition to the KONEX market. Additionally, the requirement for appointing designated advisors, a prerequisite for listing on the KONEX, will be temporarily relaxed to expedite the listing process. Similar provisions for transitioning from KOSPI to KONEX will also be implemented under the same qualifying conditions.
The meeting also addressed concerns regarding rising interest rates and their implications for the financial markets. Participants acknowledged the increasing pressures from various factors, including the rise in government bond issuance, the issuance of corporate bonds by global AI firms, and the potential for rising oil prices due to geopolitical tensions in the Middle East. As such, there is a concerted effort to monitor the dynamics of the bond market closely and manage any excessive volatility.
Despite the challenges posed by rising interest rates, the assessment of vulnerable borrowers and the financial health of mutual finance institutions remains largely positive. However, there is a consensus that significant increases in interest rates could pose challenges in the future. In response to these findings, the government reaffirmed its commitment to implementing measures supporting vulnerable borrowers without delay. The proactive steps taken by the government demonstrate a commitment to fostering a robust financial ecosystem, supporting companies in distress, and ultimately ensuring a resilient economic environment as South Korea navigates through these turbulent times.
[관련기사] https://n.news.naver.com/mnews/article/016/0002692772?sid=101
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