● Delisting – Unlock Stock Surge!
Recent Trends in Delisting from Japanese and Korean Stock Markets and Their Implications
This article summarizes why the delisting trend that started in Japan emerged, what the situation is in Korea, how stock price changes and general investors are affected during the delisting process, and what the peculiarities of the legal system or capital market are, all at a glance.
It mainly deals with economic and stock keywords such as initial public offering (IPO), stock market investment, corporate value, M&A, and tender offer.
In particular, by comparing cases in developed countries such as Japan and the United States with the domestic reality, it will provide detailed economic prospects for the impact on domestic corporate investment in the future.
1. Summary of the Beginning and Background of the Delisting Trend in Japan
In Japan, there is a growing trend for companies to decide to delist (Delisting) first.
The starting point of this change is that the merit of maintaining the listing has decreased for undervalued companies.
The essence of listing is to raise funds through general shareholder recruitment, investment, and increase corporate value, but for old companies or those that have reached their growth limits, like in Japan, listing can be a burden.
After changes in corporate governance such as strengthening outside directors and strengthening shareholder rights, listing itself is no longer a merit, but rather 'delisting' has become an option for companies.
A prime example is the market trend where management or major shareholders directly buy shares through a tender offer to promote delisting.
Delisting for the purpose of undervaluation, regulatory burden, and strengthening management control is becoming a new normal trend not only in Japan but also in developed capital markets such as the United States.
2. Reality of Listed Companies in Korea and Systemic Problems
In Korea, the number of 'companies with no place to invest' with declining investment appeal is increasing.
Listed companies have shareholder protection devices such as 'duty of loyalty of directors (executives) and shareholders' and 'cumulative voting system' by law, so listing is no longer a merit for companies, but rather only increases obligations.
As various regulations such as the Capital Market Act become stronger, the cost and benefits of maintaining the listing decrease, and delisting becomes more attractive for undervalued companies.
3. Delisting Process, Tender Offer, and Stock Price Changes
Delisting is usually promoted by the majority shareholder making a tender offer (Open Tender Offer) for the existing shareholders' stake.
At this time, the majority shareholder has no choice but to buy the shares at a higher price than the current stock price.
For this reason, when delisting rumors or actual announcements appear, the stock price rises sharply in the short term.
Investors can use this as an opportunity for 'M&A (Mergers and Acquisitions) or transfer of management rights'.
4. Comparison of Capital Market Structures between the US, Japan, and Korea, and Implications
In Japan and the United States, the environment allows for structural adjustments such as M&A, tender offers, and delisting to occur naturally in the market.
In the case of Korea, the capital market is in a 'constipated' state due to excessively rigid legal systems and regulations, making structural adjustments or delisting not smooth.
In developed markets, new investment opportunities arise centered on undervalued companies and companies with high potential, but in Korea, capital does not flow efficiently due to regulations, and corporate value is undervalued.
5. Impact of Future Delisting on the Korean Stock Market and Investment Strategies
In the future, the trend of undervalued listed companies gradually promoting delisting, public resale, and M&A under the leadership of majority shareholders is expected to become more apparent.
If normalization of the capital market, deregulation, and re-evaluation of corporate value are accompanied, opportunities for short-term surges or structural rerating (increase in corporate value) may increase.
Investors should develop investment strategies by carefully examining key signals such as delisting potential, tender offer price, shareholder value enhancement movements, and changes in majority shareholder ownership.
6. Conclusion and Key Understanding Points of the Recent Market
The delisting wave from Japan is becoming a common phenomenon in developed capital markets, and Korea will also see a trend of delisting and M&A centered on undervalued companies.
Strengthening shareholder protection and strengthening regulations can create new investment opportunities.
Rather than a simple initial public offering (IPO) boom, we need to pay attention to major changes in the capital market such as restructuring, changes in management rights, and re-evaluation of corporate value and establish mid- to long-term strategies.
< Summary >
- Reasons why delisting became a trend in Japan: Undervaluation and burden
- Korea also has increased delisting appeal due to regulations and undervaluation
- In delisting situations, stock prices surge, creating investment opportunities through tender offers
- The US and Japan have free capital market restructuring, but Korea is rigid
- This trend is expected to grow in Korea in the future, requiring changes in investment strategies
2024 Comprehensive Summary of Delisting Trends and Economic Outlook in Japan and Korea
The recent surge in delistings in the Japanese stock market is part of the capital market restructuring and is a new exit strategy for undervalued companies and listed companies facing growth limits.
In Korea, as investor protection systems such as the duty of loyalty of directors and cumulative voting have been strengthened, the listing of companies itself is no longer attractive due to excessive regulatory burden.
Delisting through tender offers or M&A stimulates short-term stock price increases, and investors are also paying attention to wealth management strategies that take advantage of this opportunity.
Unlike developed countries such as the US and Japan, corporate value re-evaluation is not properly done in Korea due to the rigidity of the capital market and current systemic problems.
In the future, delisting and M&A centered on undervalued companies are expected to expand in the Korean stock market, so
It is necessary to periodically check economic trends such as stock investment, initial public offering, changes in management rights, capital market restructuring, and corporate value analysis to strategically rebalance the portfolio.
[Related Articles…]
- Record Number of Delistings in 2024, Reasons and Investment Strategies
- Analysis of Capital Market Measures to Resolve Undervaluation of Corporate Value
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