FILE PHOTO: Lee Jae-myung, leader of South Korea's main opposition Democratic Party, takes a look around at Gounsa temple devastated by a wildfire in Uiseong, South Korea, March 27, 2025.REUTERS/Kim Hong-Ji/File Photo
SEOUL (Reuters) -South Korea's leading presidential candidate, Lee Jae-myung, pledged on Monday to revive legislation to curb abuses by controlling shareholders, as part of a plan to boost the stock market and eliminate the so-called "Korea Discount".
The liberal candidate announced his pledge to double the value of the country's main stock index, in an effort to woo the country's 14 million retail investors, widely known as "ants".
"I will end the ‘Korea Discount’ era and open the ‘Korea Premium’ era," said Lee, who is leading opinion polls for the presidential election in June.
The 'Korea Discount' refers to the lower valuations that South Korean companies typically trade on relative to their global peers partly due to the dominance of family-owned conglomerates, which have been criticised for putting their interests ahead of other shareholders.
South Korea's parliament, controlled by the liberal Democratic Party formerly led by Lee, passed a revision of the Commercial Act in March that expanded the fiduciary duty of board members to include protecting the interests of minority shareholders.
But South Korea's acting President Han Duck-soo vetoed the legislation, which he said could impede management's decision-making and create unnecessary confusion. The country's business lobby groups also raised objections.
South Korea last year proposed a programme to boost the value of listed companies through voluntary measures, such as setting out their own plans to improve shareholder value.
The initiative has been criticised for being too weak, with analysts and investors say amending the Commercial Act would be a more effective way of improving corporate governance and tackling the 'Korea Discount'.
Lee also promised to set out a roadmap for South Korea's domestic stock market to secure developed market status from global index provider Morgan Stanley Capital International (MSCI).
South Korea last month lifted a five year ban on short-selling, which MSCI had cited as a factor hindering foreign access.
Lee, who was an active stock investor in the past, also vowed to crack down on stock price manipulation and other unfair practices.
South Korea's KOSPI briefly rose as much as 0.6% after Lee's comments, before erasing gains to trade flat as of 0452 GMT. The index has been pressured by political instability stemming from the impeachment of South Korean President Yoon Suk Yeol, as well as U.S. President Donald Trump's tariffs.
On Sunday, Lee won a landslide victory in the second round of primaries of the Democratic Party, which plans to pick its presidential candidate on April 27.
His popularity rating for the presidential election is over 50%, against 12% for conservative frontrunner Kim Moon-soo, according to a Realmeter poll released on Monday.
(Reporting by Hyunjoo Jin and Jihoon Lee and Hyunsu Yim; Editing by Kim Coghill, Sonali Paul, Kate Mayberry and Raju Gopalakrishnan)
