NEW BEGINNINGS? CORPORATE GOVERNANCE AND THE OUTLOOK FOR JAPAN AND KOREA

Posted on July 23rd, 2024

Japan’s stunning turnaround in corporate governance has captivated market attention over the last year, propelling the Nikkei to record highs. Now Korea could be following suit. Does this mark a new beginning for two of the global market’s perennial corporate governance laggards? Border to Coast Portfolio Managers Hernan Enriquez and John Lothian analyse the case for why this time may be different.

Improvements in corporate governance in Japan have followed the same long and grinding pattern of two steps forward, one step back, before taking a great leap forward over the last year. Why has reform accelerated so rapidly after decades of subpar progress? And how might Japan’s experience shed light on Korea’s push to improve corporate governance and eliminate the infamous “Korea discount” wherein Korean stocks trade much lower multiples than global peers?

The positive change happening now in Japan and beginning to take root in Korea will not only improve the quality of the companies we own today but broaden our investable universe as more companies improve their balance sheets, make more rational decisions on their portfolio of businesses, and position themselves for the growth opportunities best suited to their inherent capabilities.

The full article is available here.

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