Korean market: Structural benefits and technical obstacles coexist, governance reform is the core focus (Morgan Stanley)
Morgan Stanley pointed out that the Korean market has structural advantages such as the proliferation of AI technology and industrial super cycles, but it also faces technical obstacles such as high valuations and retail investor leverage.
Morgan Stanley pointed out that the Korean market has structural advantages such as the proliferation of AI technology and industrial super cycles, but it also faces technical obstacles such as high valuations and retail investor leverage. The capital and governance reforms promoted in 2026 (such as commercial law revisions, sovereign wealth funds) are expected to increase corporate shareholder returns and ROE, which is the key to the future trend of the market. One-sentence conclusion: South Korea's capital market is standing at a turning point of reform and growth. Whether governance reforms can be implemented will determine whether it can transform from a "structural" positive to a "systemic" bull market. Positive/negative: Positive for the Korean capital market, especially high-dividend and value stocks that are expected to benefit from improved shareholder returns. The market has expectations for the repair of South Korea's "discount", but the execution and speed of reforms are key variables. Catalysts: 1) Progress on the Commercial Law Amendment Bill in the Korean Parliament; 2) Updates on shareholder return plans of major companies (such as Samsung and SK Hynix); 3) The Korean government’s specific plan to establish a sovereign wealth fund.