south korean president lee jae-myung confronts economic challenges with chaebol summit

2025-06-13 general

seoul, Friday, 13 June 2025.
president lee jae-myung of south korea met with the leaders of the country’s top chaebols, including samsung, hyundai, and lg, to tackle pressing economic issues. this marks his first engagement with the business sector since assuming office. discussions centered on revitalizing weak domestic demand and formulating strategies against the backdrop of united states tariff policies. notably, gallup korea’s survey indicates that 70% of south koreans anticipate lee will successfully manage his five-year presidential term, reflecting initial optimism amid economic uncertainties.

lee’s economic agenda and market response

lee jae-myung’s administration is prioritizing economic revitalization following his inauguration on june 4, 2025 [1][3]. his initial steps include establishing a task force to address economic challenges and planning supplementary budget measures [1]. he visited the korea exchange to demonstrate his commitment to doubling the stock market’s value [4]. lee’s active engagement with economic issues has boosted investor confidence, with the kospi index achieving a three-and-a-half-year high [4][7]. since his election, the kospi has risen by over 7%, surpassing the 2900 point mark [4].

optimism and kospi’s bullish trend

the kospi index has shown a significant recovery, climbing more than 20% from its april low and entering a technical bull market on lee’s election day [4][7]. this surge reflects strong investor anticipation regarding lee’s pledges to implement corporate governance reforms and eliminate the ‘korea discount’ [4]. lee aims to elevate the kospi to 5000 points during his term and is initiating measures to combat market irregularities and incentivize higher dividend payouts through tax reforms [4]. darren kang, co-founder of lee asset management, views this as a pivotal moment for korea’s public markets [4].

addressing the ‘korea discount’

the ‘korea discount’ refers to the undervaluation of south korean companies, with kospi firms hitting a historical low price-to-book ratio of 0.84 last year, indicating valuations below their net asset value [4][7]. this issue stems from complex cross-shareholding structures that allow chaebol families to control subsidiaries with minority stakes, offering inadequate protection for minority shareholders [4][7]. lee jae-myung and his democratic party are proposing stringent shareholder protection measures, including revisions to the commercial act to enforce directors’ fiduciary duties to shareholders [4]. these reforms seek to prevent actions that undermine shareholder interests [4].

challenges and potential obstacles

despite the positive market response, lee’s reforms face resistance from major chaebols, who fear the new regulations could stifle corporate growth and weaken the industrial base [4][7]. concerns exist that the proposed reforms might be diluted under pressure from these powerful entities, potentially undermining shareholder rights [4]. additionally, the south korean economy faces challenges, including declining profits in major companies and the potential for a market correction following recent investor exuberance [4]. the kospi’s historical high was 3302 points in 2021, meaning lee’s 5000-point target requires a further 70% increase [4].

lee’s anti-japan stance and domestic policy

lee jae-myung has adopted a firm stance against pro-japan sentiments, a move that resonates with a population still affected by the historical legacy of japanese colonial rule [5]. this position contrasts with the previous administration’s policies, which were criticized for being too lenient towards japan [5]. lee’s approach aims to address long-standing grievances and restore national pride, potentially influencing investor sentiment and trade relations [alert! ‘the impact of anti-japan policies on foreign investment needs further analysis’]. gallup korea’s survey reveals that 16% of respondents want lee to prioritize economic recovery and revitalization [1].

Bronnen

south korea chaebol