韩国股票策略：韩国选举——变革之风

Issuer of report:The Hongkong and ShanghaiBanking Corporation Limited, Seoul Securities BranchView HSBC Global Research at:https://www.research.hsbc.comListen to our insightsFind out moreHSBC Global Research PodcastsRicky Seo*Head of Korea Research, Semiconductor and DisplayThe Hongkong and Shanghai Banking Corporation Limited,Seoul Securities Branchrickyjuilseo@kr.hsbc.com+82 2 3706 8777Karen Choi*Head of Consumer & Retail Research, Asia PacificThe Hongkong and Shanghai Banking Corporation Limited,Seoul Securities Branchkaren.choi@kr.hsbc.com+82 2 3706 8781Will Cho*Analyst, Korea EV Battery, Autos and TechnologyThe Hongkong and Shanghai Banking Corporation Limited,Seoul Securities Branchwill.cho@kr.hsbc.com+82 2 3706 8765Jaewoong Won*Analyst, Korea Financials & FintechTheHongkong and Shanghai Banking Corporation Limited,Seoul Securities Branchjaewoong.won@kr.hsbc.com+82 2 3706 8770Yushin Park*Analyst, Korea Industrials & UtilitiesThe Hongkong and Shanghai Banking Corporation Limited,SeoulSecurities Branchyushin.park@kr.hsbc.com+82 2 3706 8756Junhyun Kim*Analyst, Korea Internet Gaming and EntertainmentThe Hongkong and Shanghai Banking Corporation Limited,Seoul Securities Branchjunhyun.kim@kr.hsbc.com+82 2 3706 8763Yonghua Park*, CFAAnalyst, Asia Energy TransitionThe Hongkong and Shanghai Banking Corporation Limitedyonghua.park@hsbc.com.hk+852 3941 7005Sophia Jung*Associate, Consumer ResearchThe Hongkong and Shanghai Banking Corporation Limited,Seoul Securities Branchsophia.jung@kr.hsbc.com+822 3706 8774* Employed by a non-US affiliate of HSBC Securities (USA) Inc, and isnot registered/ qualified pursuant to FINRA regulationsEquity Strategy & EquitiesKorea ◆◆◆ Efforts to improve corporate governance to gain momentumWe expectplans to improve corporate governance–known as the Value Up program under theprevious administration–to gain momentumasthe new president haspledged to tacklethe“Korean discount”to boost the domestic stock market.Mr. Leehaspromised to reviverevisionsto theCommercial Act, which werepreviously vetoed by acting President Han Duk-Soo in April2025 (source: Korea Times, 14 May 2025).Therevisionsinclude:1) expandingdirectors’fiduciary duties to include shareholders;2)introducing acumulative votingsystemtoprotectminority shareholders;and 3)separate election for directors on the audit committee to enhancetheir independence and limit the voting rights of a major shareholder to 3%.Mr. Leealso wantstoinstitutionalize the mandatory cancellation of treasury shares to enhance shareholder returns.SeeExhibit3 for the list of companieswhichhold significantamountsof treasury shares;shareholdersshould benefitwhen mandatory treasurysharesarecancelled.Exhibit2.Keyeconomic policyagenda of President Lee Jae-myungCategoryPolitical partyDemocratic Party of KoreaFiscal policyMore expansionary◆Supplementary budget formulation (KRW20trn+)*◆Increased expenditureCapital marketCommercial Act revision◆Expand directors’fiduciary duties toincludeshareholders◆Activatecumulativevoting system◆Mandatory cancellation of treasury stocks◆Institutionalizea certain number of new stocks forshareholders of the parent company when listing asubsidiary after a physicalspin-offTradeEarly negotiation with the US governmentNote: * Based on the previous discussion for the 1stsupplementary budget.Source:National ElectionCommission, MoneyToday, Newsis, Pressian, Financial News,Hankookilbo, Chosunbiz, Hankyung, HSBC Impact ontheKorean equity marketTechnology:SemiconductorsandequipmentWe expectSK Hynix (000660 KS, Buy)andSamsungElectronics (005930 KS, Buy)to benefitfrom thepresident’spolicy agenda. Both companiesshouldbenefit fromthesubsidiesplannedtoboost domestic fab investmentandproduction. Mr Lee’sDemocratic Party of Korea (DPK) isproposing a 10%production-basedtax incentive on domestic chip production and sales whichareestimated tototala combined KRW9trn (Samsung: KRW4.4-5trn, Hynix: KRW4trn)based on 2024financial data (Asia Business Daily, 28 April 2025). We think this will benefit domestic productionand fab investment byeasingthe pressureonthe bottom line, encouraging companies to investmorein equipment and R&D, benefiting semiconductor equipment names such asWonik IPS(240810 KS, Buy)andPark Systems (140860 KS, Buy).Exhibit6.Key policy agenda for semiconductorsCategorySemiconductorsSubsidies10% production-based tax incentiveson chips domestically produced & soldLaborEducationSupporting domestic semiconductor related university studiesOther financialaidFinancial support to fabless, semiequipment and material companiesSource:Democratic Party of Korea, People Power PartyExhibit7.Estimated tax benefits based onthe 10% production-based tax incentiveExhibit8.KRW9trn of estimated tax creditsequal14% of 2025e Korean semi capexSource:Company data, HSBC estimates, Asia Business Daily (28April 2025)Source:Company data, HSBC estimates, Asia Business Daily (28April 2025)Technology–AI infrastructureAs the importance of AI rises, the new government w