KRX Chief: Semiconductor Concentration Natural, 'Korea Discount' Easing

By Kang Jae-eun

SEOUL, June 22 (Yonhap) -- The head of South Korea's bourse operator assessed Monday that the current concentration in semiconductors is "natural," considering various factors, such as the operating profits of Samsung Electronics Co. and SK hynix Inc.

"I think (the market concentration) is a result of the natural price-setting process driven by supply and demand, taking into consideration various factors," Jeong Eun-bo, chairman of the Korea Exchange (KRX), said at a press conference with foreign media in Seoul.

The comments from the chief of Seoul's bourse operator came amid concerns over volatility in the local market, with the combined market capitalization of Samsung and SK hynix surpassing 50 percent of the total value of companies listed on the benchmark Korea Composite Stock Price Index (KOSPI).

"The price-to-earnings ratio (PER) based on the expected revenue of Samsung and SK hynix is set to be a bit shy of 7 to 8, while the figure for Micron Technology Inc. is over 10," he said.

He added that it is too early to say if the current semiconductor rally is "speculation" and that the government is making efforts to "smooth out" such market movements.

During the conference, Jeong also assessed that the so-called "Korea discount," or undervaluation of local stocks, is being "significantly" eased, supported by improving global competitiveness of the country's key industries and efforts to enhance investors' trust in the local market, including the government-led corporate "value-up program."

Under the initiative, the KRX has been making efforts to swiftly de-list insolvent companies, prevent dual listings and root out unfair trading practices.

Efforts to attract overseas liquidity is also under way, Jeong said, pointing out the recent introduction of omnibus accounts for foreigners and the extension of the local derivatives market's operating hours. The KRX is also working to make English-language regulatory disclosures mandatory for all KOSPI-listed companies by next year, in an effort to improve accessibility for overseas investors.

"We will continue to make institutional improvements to ensure that foreign investors face no difficulties in managing their assets in South Korea," Jeong stressed.