Following the record-breaking surge in the South Korean stock market, existing major shareholders are initiating a wave of share disposals. J.P. Morgan indicates that this trend is set to accelerate further as South Korea advances corporate governance reforms, prompting companies to gradually unwind cross-shareholdings and streamline their ownership structures.
Jinsoo Ha, Head of South Korea Equity Capital Markets at J.P. Morgan, noted that the recent increase in equity transactions is primarily driven by ownership changes and strategic stake reductions spurred by corporate governance reforms. High-quality foreign investors are providing solid demand on the buying side. Compiled data shows that South Korea has completed six block trades so far this year, raising a total of approximately $1.3 billion. This compares to just $296 million during the same period in the first quarter of 2025.
"While we maintain a cautious stance, we remain optimistic about continued growth in block trade activity this year," Ha stated. "Corporate governance reform has been a key driver of the stock market rally and has also provided strong support for equity capital market activities."
Over the past year, led by chip giants such as Samsung Electronics and SK Hynix, the South Korean stock market has doubled in value. President Lee Jae-myung's push for corporate governance reforms, aimed at improving capital use efficiency and dismantling opaque ownership structures to address the so-called "Korea Discount," has further fueled the market upswing.
Even amid global market volatility stemming from the situation involving Iran, South Korean equity transactions have remained active. This is partly attributable to improving corporate governance, especially as the window for annual shareholder meetings approaches. Several major transactions last week involved conglomerates unwinding cross-shareholdings – structures long criticized by foreign investors for suppressing valuations.
Hanwha Systems plans to sell a stake in Hanwha Ocean worth 1.7 trillion won (approximately $1.2 billion). Similarly, SK Discovery, part of the SK Group, has agreed to sell its shares in renewable energy subsidiary SK Eternix to private equity firm KKR.
Ha added, "Equity monetization, including block trades, helps companies and core shareholders align with the reform direction." Other significant block trades this year have involved companies like LG CNS, HD Hyundai Marine Solution, Classys, and HPSP, each exceeding $200 million in size.
In contrast to the active block trade market, initial public offerings have remained relatively subdued. South Korean IPOs raised $3.4 billion in 2025, only slightly more than the previous two years. The recent listing of digital bank K Bank, whose shares fell below the offering price amid market turbulence this month, signals weak demand for new listings, which could further slow the pace of IPOs.
"Compared to block trades, IPOs require a longer preparation cycle, so it takes more time for market interest to translate into a concrete pipeline of projects," Ha commented.
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