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The Star
2 days ago
- Business
- The Star
Global money chases hot S. Korean stock market
SOUTH KOREAN stocks, already this year's best performers among the world's major markets, are becoming a magnet for foreign investors as bold regulatory reforms to lift valuations and empower minority shareholders gain traction. Just this month, policymakers voted in favour of pivotal law changes to make board members legally accountable to all shareholders. They are now focusing on the next wave of reforms – including improvements to the voting system for selection of board members, and reducing treasury stock holdings – all with the goal of reining in the nation's many family-run conglomerates, or chaebols. From Wall Street to London, investors are taking notice. Overseas funds, which dumped South Korean stocks for nine straight months through April, are piling back into the market. Strategists at global banks including Goldman Sachs Group Inc, JPMorgan Chase & Co, Citigroup Inc and Morgan Stanley are among those who have upgraded South Korea since the start of June. The benchmark Kospi has surged 33% in 2025, helping propel the equity market's value above US$2 trillion for the first time in three years. Culture shift Reforms 'will contribute to the continuation of a culture shift already underway and will reduce the ability of controlling shareholders to compel restructurings that benefit them at the expense of minority shareholders,' said Jonathan Pines of Federated Hermes, whose US$4.5bil Asia Ex-Japan equity fund has beaten 92% of its peers over one year. 'We remain very significantly 'overweight' on South Korean stocks.' South Korean authorities have been seeking to replicate the success seen in Japan, where a push for corporate reforms helped boost valuations and spur a world-beating equity rally. Optimism that the nation is serious about tackling the so-called 'South Korea discount' has grown since newly elected President Lee Jae Myung made raising governance standards and improving stock-market returns one of his top priorities. Net inflows from foreign funds have crossed US$3bil in July alone. That's more than their combined purchases in the previous two months. 'We're seeing a big change in the corporate governance,' said Joshua Crabb, head of Asia Pacific equities at Robeco Hong Kong Ltd, noting more capital discipline, buybacks and dividends. 'This does not require a great global environment. 'These are things that are almost like a bit of self-help.' After having discussed the latest round of commercial code revisions earlier this month, lawmakers plan on voting for them on Aug 4. During this round, they will be pushing to mandate a cumulative voting system for listed firms in an effort to promote board diversity. Cumulative voting has become a cornerstone of the ruling Democratic Party's corporate governance agenda. In such a system, a shareholder typically receives votes equal to the number of shares they hold multiplied by the number of board seats up for election. This would enable minority shareholders to pool votes and elect at least one board member aligned with their interest – such as advocating for more share buybacks or dividends. Another proposal that will be considered for this round would be to cap the number of audit committee members that major shareholders can nominate. Treasury stock Then there is the issue of treasury shares, which have become a flashpoint in South Korea. Such stock can be transferred by companies to friendly parties, such as family members or affiliates – who then can vote with them to give the controlling family more power without increasing actual ownership. While not directly part of the agenda for this round of corporate code revisions, a proposal to mandate the cancellation of treasury stock remains a key focus for Lee and his allies as they pursue their ambitious goal of 'Kospi 5000.' The proposal has drawn strong opposition from conglomerates. It should be phased in 'to avoid instability,' Lee Han-joo, a senior aide to Lee and the head of the State Affairs Planning Committee, told Bloomberg in a recent interview. At a minimum, companies may push to preserve existing treasury shares while agreeing to cancel those acquired going forward, said Seokkeun Ha, chief investment officer at Eugene Asset Management. 'That would disappoint the market,' he said. Authorities are discussing various options in this regard, according to a person familiar with the matter. Options range from creating a model similar to that of Germany's to using a more stringent approach that requires all existing treasury shares to be retired within six months, the person said, asking not to be identified as negotiations are ongoing. The German model requires companies to sell treasury shares that exceed 10% of the capital stock within three years of purchase, according to information on a government website. 'If we're aiming for Kospi 5,000, I believe treasury share cancellation is essential,' Ha said. 'That's how return-on-equity increases and higher return of equity drives up the price-to-book ratio.' Lee's crusade to protect minority shareholders' rights relies on lawmakers delivering substantive changes at a credible pace while resisting pushback from entrenched interests. With markets having rallied so hard on expectations, the bar for disappointment is low. In a recent survey of 300 listed companies released by the South Korea Chamber of Commerce and Industry, about 77% said further commercial code revisions could have 'negative impact on business growth.' 'Big bang gains were quite a bit driven by sentiment, and that's gone,' said Xin-Yao Ng, investment director at Aberdeen Investments. 'Going forward, we'll need better delivery of legislation to incentivise value-up and companies themselves delivering actual changes.' — Bloomberg Sangmi Cha and John Cheng write for Bloomberg. The views expressed here are the writers' own.
AU Financial Review
5 days ago
- Business
- AU Financial Review
JPMorgan traders still see ‘significant step higher' for US equities
New York | The S&P 500 Index's record-setting spree may be stoking concerns about inflated share prices and a revival of meme-stock froth, but JPMorgan Chase & Co's trading desk isn't concerned. Rather, it expects the furious rally in US equities to keep going. 'While bullishness is not yet consensus, client conversations reveal that even those that skewed bearish are throwing in the towel,' the bank's head of global market intelligence Andrew Tyler said on Thursday (Friday AEST) in a note ahead of the market open.
The Star
17-07-2025
- Business
- The Star
Bond bears return as long-term yields surge past 5%
In JPMorgan Chase & Co's latest Treasury client survey, investors' net long positioning shrank to the smallest in six weeks. — Bloomberg WASHINGTON: A bearish tone is taking hold in the Treasury market amid worries over the risk of tariff-fuelled inflation and increased government spending in some of the world's biggest economies. In JPMorgan Chase & Co's latest Treasury client survey, investors' net long positioning shrank to the smallest in six weeks. That coincides with selling pressure in US government debt, which picked up on Tuesday after June consumer price data failed to assuage concerns over the impact of trade levies. In response, investors trimmed bets the Federal Reserve will cut interest rates as soon as September. The 30-year Treasury yield climbed above 5% for the first time since early June, and there were large flows seen in options bets costing a combined premium of about US$10mil that target a jump to around 5.3% within roughly five weeks. The rate on the long bond hasn't been that high since 2007. The fresh bout of angst toward the United States 30-year bond follows a slump in Japan's longer-dated government debt this week as investors brace for the prospect of increased fiscal stimulus there in the wake of upper house elections this coming Sunday. Yields on Japanese bonds from the 10-year to the 40-year have spiked this week, echoing the surge seen in global markets in May. There are other bearish signals coming from the options market. The so-called skew on 30-year Treasuries has moved sharply over the past week toward put premiums as investors demand increased protection against higher yields and a bigger selloff in long-dated debt. That leaves long-bond options favouring puts by the most in about a month. — Bloomberg
Yahoo
15-07-2025
- Business
- Yahoo
Stock Market News for Jul 15, 2025
U.S. stocks closed higher on Monday, with the Nasdaq closing at a fresh record high, as President Donald Trump's tariff threats kept investors on edge while they waited for key economic data and the start of the earnings season. All three major indexes ended in positive territory. The Dow Jones Industrial Average (DJI) rose 0.2% or 88.14 points, to close at 44,459.65 points. The S&P 500 edged up 0.1%, or 8.81 points, to finish at 6,268.56 points. Communication services and financial stocks were the biggest gainers, while material stocks were the worst performers. The Financials Select Sector SPDR (XLF) gained 0.8%, while the Communication Services Select Sector SPDR (XLC) added 1%. The Materials Select Sector SPDR (XLB) lost 0.6%. Seven of the 11 sectors of the benchmark index ended in positive territory. The tech-heavy Nasdaq added 0.3%, or 54.80 points, to end at 20,640.33 points, hitting a fresh all-time closing high. The fear-gauge CBOE Volatility Index (VIX) was up 4.88% to 17.20. A total of 15.43 billion shares were traded on Monday, lower than the last 20-session average of 17.62 billion. Stocks ended mostly higher on Monday despite Trump's tariff threats over the weekend. Trump announced on Saturday that he would impose 30% tariffs on the European Union and Mexico starting Aug 1. Investors have been closely monitoring any developments on the tariff front after EU leaders hinted at negotiating with the Trump administration this month to reach a deal that would lower the duties. The optimism kept losses in check on Monday as investors believe that the high tariffs will ultimately be negotiated down before Aug 1. Trump's renewed tariff threats come just days ahead of the key inflation reading. The consumer price index reading, which will be released on Tuesday, will give investors a clearer picture of how Trump's tariffs, which are already in effect, are impacting the economy. The second-quarter earnings season, which kicks off later this week, and investors are eagerly waiting to assess the financial outlook of the major companies after the new tariffs go into effect. Major banks, including JPMorgan Chase & Co. (JPM), Citigroup Inc. (C) and Wells Fargo & Company (WFC) are scheduled to report their quarterly results on Tuesday. Also, Bank of America Corporation (BAC) and The Goldman Sachs Group, Inc (GS) will report their quarterly results later this week. Goldman Sachs has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. No major economic data was released on Monday. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The Goldman Sachs Group, Inc. (GS) : Free Stock Analysis Report Bank of America Corporation (BAC) : Free Stock Analysis Report Wells Fargo & Company (WFC) : Free Stock Analysis Report JPMorgan Chase & Co. (JPM) : Free Stock Analysis Report Citigroup Inc. (C) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Malaysian Reserve
15-07-2025
- Business
- Malaysian Reserve
Alibaba to Baidu lead surge in equity-linked bond sales in Asia
ASIAN sales of bonds that can be turned into shares have soared in 2025, heading toward multiyear highs, as interest rates remain elevated and rallying stocks create the right conditions for this corner of the market to thrive. Led by Chinese companies, firms in the region have sold more than $30 billion of convertible and exchangeable bonds this year, up from over $20 billion in the same period a year earlier, according to data compiled by Bloomberg. Offerings denominated in US and Hong Kong dollars have been particularly popular. Concerns about inflation from US tariffs have kept Federal Reserve officials from cutting rates, making instruments such as convertibles that pay little, or even no interest, more attractive for borrowers. For investors, these hybrid securities offer a way to ride the recent rally in Chinese stocks — with limited downside. 'It's been an extraordinarily busy year and it will continue to be busy,' said Gautam Sareen, head of Asia Pacific equity linked and private capital markets at JPMorgan Chase & Co. 'Market conditions have never been healthier.' Demand has been so high for equity-linked securities that all of Asia's five largest issuances in this space didn't have to pay any interest. China's Baidu Inc., Alibaba Group Holding Ltd. and Ping An Insurance (Group) Co. of China Ltd. were among the biggest issuers of these hybrid instruments this year. Baidu raised $2 billion from the sale of notes exchangeable into shares of online-travel agent Group Ltd., while Alibaba sold HK$12 billion ($1.5 billion) of bonds that can be turned into shares of Alibaba Health Information Technology Ltd., following other issuers in taking advantage of the lower funding costs in the Hong Kong dollar compared to the greenback. Ping An raised almost HK$12 billion from its convertible. China's stock market 'felt quite solid right after Liberation Day and then rebounded very, very quickly,' said Brian Chau, co-head of equity-linked Asia at UBS Group AG. 'The APAC market is at a record strength.' Elsewhere, Grab Holdings Ltd. and MakeMyTrip Ltd. also had a big offerings, as did ailing carmaker Nissan Motor Co., which recently raised ¥200 billion ($1.4 billion) from one of Japan's biggest convertible bonds in years. In South Korea, LG Chem Ltd.'s $1 billion exchangeable bond in May revived a market that had dried up in the country in the wake of a 2023 short-selling ban that was only lifted few months ago. And although a flare-up of tensions on the geopolitical front or a negative shock for the global economy could shut the issuance window quickly, expectations remain high for offerings to keep flooding in. Saurabh Dinakar, head of Asia Pacific global capital markets at Morgan Stanley, said that DeepSeek's sudden emergence as an artificial-intelligence powerhouse and Chinese companies' low valuations helped kickstart the rally earlier this year, and the outlook remains bright. Investors now feel that valuations in China are 'at a bit of an inflection point and as a result they are wanting to get involved and engage in certain sectors,' Dinakar said. 'Assuming that we don't have a wobble from a geopolitical standpoint, our view is that the market will remain active for the balance of the year.' –BLOOMBERG
