A Goldman Sachs report dated September 9th points out that shareholder returns are expected to increasingly become a significant driver of the South Korean stock market, complementing earnings growth and helping to improve the market's long-held perception of weak capital returns for South Korean companies.
1. Continued Policy Implementation: The "Corporate Value Enhancement" program, dividend tax incentives, and proposed reforms to the share buyback-related tax system are creating stronger economic incentives for companies and investors. The policy focus is shifting from voluntary disclosure of "value enhancement" information to providing more substantial incentives and strengthening accountability for capital allocation and shareholder returns.
2. Fundamental Support: Market consensus earnings and free cash flow continue to be revised upwards, while corporate balance sheets remain well-stocked. This enables companies to further increase dividend and share buyback amounts without significantly impacting investment spending or balance sheet quality.
3. Strong Total Shareholder Returns: Share buybacks and treasury stock cancellations are accelerating, and high-dividend investment opportunities are expanding across the market. Given the strong fundamentals, corporate dividends and share buybacks are expected to increase significantly in 2026-2027, driving total shareholder returns to historical highs, projected to be around 9% in 2026 and around 14% in 2027.
