Japan’s value-up is the result of 10-year structural reform

The government's 'Valuation Up Program' is being promoted to address the persistent problem of 'Korea Discount' (undervaluation of the Korean stock market), but the Korean stock market has yet to enjoy any significant effect. Speaking at the '2024 Dong-A New Centennial Forum' hosted by The Dong-A Ilbo and Channel A at Lotte Hotel in Jung-gu, Seoul on Wednesday, Yoshio Horimoto, director general of the Financial Services Agency of Japan, introduced the case of Japan, which previously promoted a valuation program, and detailed the success factors that Korea could take note of.

“The plan included not only corporate governance reforms in Japan but also structural reforms to change the behavior of all parties involved in the investment chain, including financial institutions and households in Japan,” Horimoto said, describing the decade-long value-up policy as a ‘comprehensive package. “The Japanese government has been engaging with global investors and working hard to make Japanese companies more visible to global investors.”

“Companies should use the funds they receive from asset management companies and asset owners appropriately and return the fruits of their investments to their shareholders, the households. This is corporate governance reform,” Horimoto said. ”Japanese companies have been working on corporate governance reform for at least a decade. The provisions of the Code of Best Corporate Governance Practices are getting more and more detailed.”

The Japanese government has also implemented policies to encourage investment by bringing cash into the market that has been dormant for decades in family closets. “We need to encourage as many people as possible to become investors so that they can continue to experience the benefits of investing, even in small amounts,” Mr. Horimoto said. ”To that end, we first set up an investment system for the general public.”

In the forum discussion that followed the presentation, Ahn Soo-hyun, Dean of the Graduate School of Law at Hankuk University of Foreign Studies, said, “Value-up is not just an investment, but a really important institutional tool to create a retirement fund for the entire population, and it is a policy that must generate good results. Korea needs to design policies in a more multi-dimensional way.”


Joo-Young Jeon aimhigh@donga.com