[Anchor]

Terms like treasury stock purchases and retirements, which became the center of today's (28th) news, may be unfamiliar to some. Such practices have been rare in our stock market, which has been cited as a cause for the undervaluation of the Korean market. With today as a turning point, there is hope that more active shareholder returns will create a virtuous cycle where corporate value rises and profits return to shareholders.

Reporting by Lee Seong-hoon.

[Reporter]

Minority shareholders welcomed SK Hynix's unprecedented shareholder return decision.

[Interview / Goo Hyun / Gangseo-gu, Seoul: Since my stocks are trapped at a high price, it is only natural that I find this news welcoming.]

[Interview / Kim Jun Han / Wonju, Gangwon Province: I think it is necessary to be more active in returning profits to shareholders, even for the sake of defending the stock price.]

There are largely two types of shareholder returns where a company returns the money it earns to shareholders: dividends, which directly provide cash, and treasury stock buybacks and cancellations.

When treasury stocks are cancelled, the number of shares decreases, so even if a company's profits remain the same, the earnings per share increase.

However, domestic companies have previously been passive about such shareholder returns.

Last year, South Korea's total shareholder return rate was 39%.

This means that if a company earned a net profit of 10, it returned about 4 of it to shareholders.

The United States returned over 7, and Japan returned over 6, showing higher shareholder return rates than South Korea.

According to an analysis of stock markets in 45 countries worldwide by the Korea Capital Market Institute, shareholder return policies had the highest impact among variables influencing stock prices, at 37%.

However, due to the characteristics of industries requiring large-scale investments, such as electronics and automobiles, a practice of hoarding earned cash has persisted among Korean companies.

On the other hand, there were not a few cases where the accumulated cash was utilized to strengthen the governance structure of controlling shareholders rather than for the interests of shareholders.

[Interview / Bin Ki-bum, Professor of Economics and Statistics, Myongji University: If excess cash is simply left as cash holdings, it is an asset that generates no profit. Not only does it fail to generate profit, but there is also a high possibility that management will use it to pursue private interests regardless of the interests of shareholders, which can damage corporate value.]

If the focal point shifts toward shareholders starting from this occasion, investor trust will increase, leading to long-term investment, and stock prices are expected to receive evaluations commensurate with corporate value.

It is also pointed out that it is time for the government to prepare systems to support companies in making more shareholder returns.

(Video Editing: Kim Jin-won, VJ: Jeong Han-wuk, Design: Lee Ga-jin)