The landslide victory of the main opposition Democratic Party of Korea (DPK) in Wednesdays’ general elections is likely to dash many of the government’s economic policy plans that require the National Assembly’s approval for legislative revisions.The failure to secure deals with the DPK and other opposition parties, which together will hold nearly two-thirds of the 300-member Assembly, is expected to stall the government’s policy agenda. This includes anticipated measures for tax relief and regulatory easing, eagerly awaited by investors and businesspeople.One of the main agenda items was the Corporate Value-up Program, aimed at addressing the so-called Korea discount — a lower valuation of Korean stocks compared to global peers — by prioritizing shareholder returns and improving transparency in corporate governance.After the program was announced in January, the benchmark KOSPI displayed robust performance both in February and March, buoyed by an influx of foreign investments.
However, the ruling People Power Party’s (PPP) defeat is casting a shadow over public expectations of the program.Compounded by inflationary pressure from the U.S., the share prices of companies previously identified as beneficiaries of the initiative, particularly those with low price-to-book ratios (PBR), declined markedly, Thursday. The stock prices of insurance companies, in particular, saw a 4 percent decline, while retail and financial stocks also suffered 3.5 percent and 3.1 percent declines, respectively.”Even though the Financial Services Commission will announce extra incentives for companies participating in the program (in May), the momentum will inevitably be weakened without the Assembly’s support,” Kang Dae-suk, an analyst at Yuanta Securities, said.Earlier, the government had promised to reduce corporate taxes for companies participating in the initiative. But the DPK has consistently opposed the idea, criticizing the government’s regulatory easing policies as being tantamount to a “tax reduction for the rich” and aggravating the 카지노사이트킹 fiscal deficit.