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South Korea’s stock exchange chief defends slow start to corporate reform drive

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South Korea’s stock exchange chief defends slow start to corporate reform drive

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The head of South Korea’s stock exchange, Jeong Eun-bo, has defended his country’s stalling corporate reform drive amid disappointment among local and foreign investors that Seoul is failing to replicate Tokyo’s success in boosting historically low valuations.

South Korean regulators and political leaders have spent much of this year promoting their “Corporate Value-up” initiative, which includes a new index highlighting companies that have improved capital efficiency, as well as tax incentives for businesses that prioritise shareholder returns.

But just 1 per cent of South Korea’s 2,600 listed companies have signed up or committed to signing up to the programme since it was announced in February, with leading industrial groups including Samsung and chips-to-batteries conglomerate SK Group yet to announce plans to participate.

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“The Corporate Value-up programme was a politically designed stop-gap measure designed to appease local retail investors ahead of parliamentary elections earlier this year, but it ended up as a total failure,” said Park Ju-geun, head of Seoul-based corporate research group Leaders Index.

But Jeong, chief executive of Korea Exchange, which operates the Kospi and Kosdaq indices, told the Financial Times that momentum would build behind the initiative as the country’s biggest conglomerates joined.

Carmaker Hyundai Motor said last month it would set new total shareholder return and share buyback targets as it announced its participation, while electronics group LG and steel-to-battery materials conglomerate Posco are also expected to announce plans to join.

“Korea has a strong naming and shaming culture,” said Jeong. “If leading companies join the Corporate Value-up programme, others are bound to follow suit.” He added that Samsung, South Korea’s largest industrial group, had privately communicated to him their intention to sign up for the voluntary programme by the end of this year.

But he also argued that the role Tokyo’s corporate governance drive played in powering the Nikkei 225 index to historic highs this year had been “exaggerated”. The revival of the Tokyo bourse was attributable principally to a recovery in Japan’s underlying industrial competitiveness, he said.

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Blaming a lack of innovation at South Korea’s main industrial groups for their low valuations, he said companies such as Samsung needed to address what he described as “rational” investor concerns about their intrinsic value. Shares in Samsung Electronics hit a 52-week low on Wednesday.

“Our stock prices have not risen enough compared with other major countries, but this is a matter of our industries’ growth potential,” said Jeong. “The key is how each company invests and innovates, and there is not much the Korean authorities can do about this.”

Defying expectations that South Korea would benefit from western money flowing out of China and the diminishing opportunities to invest in undervalued companies in Japan, there was a net outflow of $5.5bn from the South Korean stock market in the first half of 2024, with South Korean holdings in US stocks increasing 26.2 per cent over the same period.

About two-thirds of companies listed on the Kospi benchmark trade at a price-to-book ratio of less than one, meaning the market values them below the stated worth of their net assets. Many analysts blame a legal and regulatory framework designed to protect the founding families of industrial groups at the expense of minority shareholders.

With more South Korean retail investors getting involved in the stock market since the coronavirus pandemic, the “Korea discount” of chronic undervaluations has become more of a political issue. The national pension fund — the largest buyer of South Korean stocks — is also being hit, at a time when it is projected to run out of money in the 2050s because of a shrinking population.

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Jeong said Corporate Value-up would help improve valuations by helping investors access better information about company plans to improve capital efficiency and shareholder returns. He added that South Korean authorities were providing stronger tax incentives than those on offer in Japan.

But Park of Leaders Index said for serious progress to be made, South Korea needed to impose on board members a legal duty to uphold the interests of shareholders.

“South Korean corporate governance is still not transparent, and minority shareholders are still routinely mistreated,” he said. “Without a fiduciary duty to shareholders, the authorities cannot credibly argue they have done everything they can.”

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Trump claims US stockpiles mean wars can be fought ‘forever’; Kristi Noem testifies before Congress – US politics live

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Trump claims US stockpiles mean wars can be fought ‘forever’; Kristi Noem testifies before Congress – US politics live

Trump says US stockpiles mean “wars can be fought ‘forever’”

In a late night post on Truth Social, Donald Trump said that the US munitions stockpiles “at the medium and upper medium grade, never been higher or better”.

He added that the US has a “virtually unlimited supply of these weapons”, meaning that “wars can be fought ‘forever’”.

This comes after Trump said that the US-Israel war on Iran could go beyond the four-five weeks that the administration initially predicted. The president also did not rule out the possibility of US boots on the ground in Iran during an interview with the New York Post on Monday.

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“I rebuilt the military in my first term, and continue to do so. The United States is stocked, and ready to WIN, BIG!!!,” he wrote.

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Key events

During his opening remarks, Senate judicicary committee chairman, Chuck Grassley, blamed Democrats for the ongoing shutdown Department of Homeland Security (DHS) but highlighted four agencies: the Secret Service, Federal Emergency Management Agency (FEMA), the Transportation Security Administration (TSA), and the Coast Guard.

Democrats are demanding tighter guardrails for federal immigration enforcement, but a sweeping tax bill signed into law last year conferred $75bn for Immigration and Customs Enforcement (ICE), which means the agency is still functional amid the wider department shuttering.

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Supreme Court blocks redrawing of New York congressional map, dealing a win for GOP

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Supreme Court blocks redrawing of New York congressional map, dealing a win for GOP

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Win McNamee/Getty Images

The Supreme Court on Monday intervened in New York’s redistricting process, blocking a lower court decision that would likely have flipped a Republican congressional district into a Democratic district.    
  
At issue is the midterm redrawing of New York’s 11th congressional district, including Staten Island and a small part of Brooklyn. The district is currently held by a Republican, but on Jan. 21, a state Supreme Court judge ruled that the current district dilutes the power of Black and Latino voters in violation of the state constitution.  
  
GOP Rep. Nicole Malliotakis, who represents the district, and the Republican co-chair of the state Board of Elections promptly appealed to the U.S. Supreme Court, asking the justices to block the redrawing as an unconstitutional “racial gerrymander.” New York’s congressional election cycle was set to officially begin Feb. 24, the opening day for candidates to seek placement on the ballot.  
  
As in this year’s prior mid-decade redistricting fights — in Texas and California — the Trump administration backed the Republicans.   
 
Voters and the State of New York contended it’s too soon for the Supreme Court to wade into this dispute. New York’s highest state court has not issued a final judgment, so the voters asserted that if the Supreme Court grants relief now “future stay applicants will see little purpose in waiting for state court rulings before coming to this Court” and “be rewarded for such gamesmanship.” The state argues this is an issue for “New York courts, not federal courts” to resolve, and there is sufficient time for the dispute to be resolved on the merits. 
  
The court majority explained the decision to intervene in 101 words, which the three dissenting liberal justices  summarized as “Rules for thee, but not for me.” 
 
The unsigned majority order does not explain the Court’s rationale. It says only how long the stay will last, until the case moves through the New York State appeals courts. If, however, the losing party petitions and the court agrees to hear the challenge, the stay extends until the final opinion is announced. 
 
Dissenting from the decision were Justices Sonia Sotomayor, Elena Kagan, and Ketanji Brown Jackson. Writing for the three, Sotomayor  said that  if nonfinal decisions of a state trial court can be brought to highest court, “then every decision from any court is now fair game.” More immediately, she noted, “By granting these applications, the Court thrusts itself into the middle of every election-law dispute around the country, even as many States redraw their congressional maps ahead of the 2026 election.” 

Monday’s Supreme Court action deviates from the court’s hands-off pattern in these mid-term redistricting fights this year. In two previous cases — from Texas and California — the court refused to intervene, allowing newly drawn maps to stay in effect.  
  
Requests for Supreme Court intervention on redistricting issues has been a recurring theme this term, a trend that is likely to grow.  Earlier last month  the high court allowed California to use a voter-approved, Democratic-friendly map.  California’s redistricting came in response to a GOP-friendly redistricting plan in Texas that the Supreme Court also permitted to move forward. These redistricting efforts are expected to offset one another.     
   
But the high court itself has yet to rule on a challenge to Louisiana’s voting map, which was drawn by the state legislature after the decennial census in order to create a second majority-Black district.  Since the drawing of that second majority-black district, the state has backed away from that map, hoping to return to a plan that provides for only one majority-minority district.    
     
The Supreme Court’s consideration of the Louisiana case has stretched across two terms. The justices failed to resolve the case last term and chose to order a second round of arguments this term adding a new question: Does the state’s intentional creation of a second majority-minority district violate the constitution’s Fourteenth and Fifteenth Amendments’ guarantee of the right to vote and the authority of Congress to enforce that mandate?    
Following the addition of the new question, the state of Louisiana flipped positions to oppose the map it had just drawn and defended in court. Whether the Supreme Court follows suit remains to be seen. But the tone of the October argument suggested that the court’s conservative supermajority is likely to continue undercutting the 1965 Voting Rights Act.   

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Map: Earthquake Shakes Central California

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Map: Earthquake Shakes Central California

Note: Map shows the area with a shake intensity of 3 or greater, which U.S.G.S. defines as “weak,” though the earthquake may be felt outside the areas shown.  All times on the map are Pacific time. The New York Times

A minor earthquake with a preliminary magnitude of 3.5 struck in Central California on Monday, according to the United States Geological Survey.

The temblor happened at 7:17 a.m. Pacific time about 6 miles northwest of Pinnacles, Calif., data from the agency shows.

As seismologists review available data, they may revise the earthquake’s reported magnitude. Additional information collected about the earthquake may also prompt U.S.G.S. scientists to update the shake-severity map.

Source: United States Geological Survey | Notes: Shaking categories are based on the Modified Mercalli Intensity scale. When aftershock data is available, the corresponding maps and charts include earthquakes within 100 miles and seven days of the initial quake. All times above are Pacific time. Shake data is as of Monday, March 2 at 10:20 a.m. Eastern. Aftershocks data is as of Monday, March 2 at 11:18 a.m. Eastern.

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