Following the stock market doubling trend, major shareholders in South Korea are cashing out! JPMorgan says the trend will accelerate amid corporate governance reform.

According to Zhihui Financial News, as the record-setting rally in the Korean stock market continues to gain momentum, existing shareholders are initiating a wave of share sales. JPMorgan has stated that this trend is expected to accelerate further as Korea advances corporate governance reforms, gradually unwinds cross-shareholdings, and simplifies equity structures.

Jinsoo Ha, Head of Korean Equity Capital Markets at JPMorgan, pointed out that the recent surge in equity transactions is primarily driven by ownership changes and strategic sell-downs prompted by corporate governance reforms, while high-quality overseas investors provide robust buying demand. Compilation data shows that six block trades have been completed in Korea so far this year, raising a total of approximately $1.3 billion; during the same period in the first quarter of 2025, the amount was only $296 million.

"Although we remain cautious, we are still optimistic that the activity in block trades will continue to increase this year," Ha stated. "Corporate governance reforms are a key driver of this equity rally and provide strong support for equity capital market activities."

Over the past year, led by chip giants such as Samsung Electronics and SK Hynix, Korea's stock market has doubled. President Lee Jae-myung has strongly promoted corporate governance reforms, focusing on improving capital efficiency and dismantling opaque shareholding structures to address the so-called "Korea discount," thereby further fueling the market rally.

Even as tensions in Iran roil global markets, Korean equity transactions remain active, partly thanks to improvements in corporate governance, especially as the window for shareholders meetings approaches. Several major transactions last week involved chaebols unwinding cross-shareholdings—a structure long criticized by foreign capital for suppressing valuations. Hanwha Systems plans to sell Hanwha Ocean shares valued at 1.7 trillion won (about $1.2 billion), while SK Group's SK Discovery also agreed to sell its renewable energy subsidiary SK Eternix to private equity giant KKR.

Ha added: "Equity monetization, including block trades, helps companies and core shareholders align with the direction of reforms."

This year's large block trades have also involved companies such as LG CNS, HD Hyundai Marine Solution, Classys, and HPSP, each with individual deal sizes exceeding $200 million.

In contrast to the active block trade market, new share issuance remains sluggish. Korea's IPO fundraising in 2025 stands at $3.4 billion, only slightly higher than the previous two years. Meanwhile, after digital bank K Bank went public amid market volatility this month, its share price fell below the offering price, indicating weak demand for new shares and potentially further slowing the pace of IPOs.

Ha stated, "Compared with block trades, IPOs require a longer preparation period, so it takes more time for market interest to translate into actual project pipelines."