국제금융시장에서의 코리아 디스카운트 현상 불식에 큰 도움 평가  
 
 미국의 저명 경제전문 주간잡지인 포브스는 최근 발행한 5월21일자에서 장하성 학장과 장학장이 운영하는 지배구조개선펀드를 커버 스토리및 관련 기사로 대서특필했다.(이은경) 

 포브스는 이 기사에서 장하성 학장이 주가가 저평가된 회사의 주식을 사들이는 방법으로 기업의 지배구조를 개선하는데 큰 역할을 하고 있다고 소개하면서 이같은 노력에 힘입어 국제금융시장에서 한국 주식을 저평가하는 이른바 ‘코리아 디스카운트 현상“을 제거해내고 있다고 높이 평가했다 . 

이 잡지는 장학장이 지난 1997년 제일은행의 부실대출을 문제삼아 주총장등에서 시위를 한 사실들을 거론하면서 이러한 일련의 행동이 일부 언론에 의해 반시장주의로 몰리기도 했다고 전하면서 그러나 장 학장의 꾸준한 주식 행동주의는 최근에 와서 '진정한 시장주의자'라는 평가를 얻고 있다고 보도했다. 

 세계적 수준의 경제 잡지가 한국의 증권시장 움직임, 그 중에서도 특히 특정인의 동향을 대서특필하는 것은 매우 이례적인 사례이다.  
 
다음은 기사 전문.
 
On The Cover/Top Stories
Cutting the Korean Discount
Andrew Salmon 05.21.07
 

A finance professor and a Lazard fund manager take aim at bad corporate practices. The goal: boost share prices.

Jang Ha-Sung's career as a corporate crusader got off to an inauspicious start. Appalled at how so many of South Korea's listed companies were run like personal fiefdoms, the finance professor went to war on behalf of minority shareholders. For his first target, in January 1997, he picked struggling Korea First Bank, which was making loans to companies that obviously couldn't repay. He suspected corruption. But taking his case directly to the shareholders wasn't easy. The bank stonewalled, denying him access to the board minutes and its shareholders' register.
 
Doubly determined, Jang took his fight to the streets: He paraded up and down a popular Seoul shopping precinct in a sandwich board, asking for help from minority shareholders. He lined up enough support to launch the country's first lawsuit for a company against its executives. But before the case was decided, the Asian economic crisis hit and the bank went under. U.S. turnaround fund Newbridge Capital bought it in 2000 and then sold it to Standard Chartered in 2005. "We were too late," he admits.
 
The effort didn't win him many friends. "Nobody had seen anything like it," recalls Jang, now the dean of Korea University's business school. "The response was hugely negative, from management, the unions and the media." His family received "strange" phone calls. The country's press, which traditionally supports big business, painted him as antibusiness, an accusation that hurt. "I am not antibusiness, but I am pro-market," he says.
 
The controversy had a silver lining. Jang caught the attention of John Lee, who has been managing Korea funds in New York since 1991. "I was very intrigued that someone like Professor Jang existed in Korea," recalls Lee. "I said, 'Is there anything I can do?'"
 
Today the two are a formidable pair. Lee, a 49-year-old expatriate who left Korea 25 years ago, is a director for Lazard (nyse: LAZ - news - people ) Asset Management. Jang, 54, who returned to Korea in 1990 after ten years in the U.S., is special adviser to Lazard's Korea Corporate Governance fund. 
 
The $280 million fund, aimed at institutions, opened in April of last year and will close when it raises $600 million. Merging Lee's financial muscle with Jang's reputation and know-how, it buys shares of small- and midcap companies that it sees as suffering from poor corporate governance. If the problems are fixed, the gains can be huge. Much to the horror of complacent chairmen, it kicks up a fuss at shareholders' meetings, using proxy rights to pry open boards and get outside directors elected. "I am in the business of making money for my investors," says Jang. "It is not just a social cause anymore, though they do go together."
 
Their goal is no less than to raise Korean stock prices across the board by reducing the "Korea discount"--the amount by which investors undervalue Korean stocks. The discount can be seen in Korea's low price/earnings and price-to-book ratios--even though the Kospi Composite Index has been hitting alltime highs for nearly two years. At a price of 11.4 times earnings for last year's second quarter Korea's shares were the cheapest among Asia's ten main emerging markets, except for Thailand's, according to Morgan Stanley (nyse: MS - news - people ).
 
Jang and Lee argue that the key to the discount is poor governance, outweighing other drags on share prices such as the North Korean threat, the country's militant unions and unpredictable regulators. Indeed, corruption within the families controlling the chaebols, a tight lid on financial and management information, and a fondness for cross-holdings and related-party transactions among affiliates have long plagued Korean companies. A World Bank report this year shows that of the 12 biggest Asian economies, Korea ranks just seventh in corporate governance, tied with Indonesia and well behind India, despite the series of reforms ushered in by the 1997--98 crisis. Such a bad reputation has helped keep Korea out of the FTSE and Morgan Stanley Capital International developed-market indexes, despite a per capita gross domestic product of $24,200 last year. Once added to those indexes, Korea would tap into a much greater pool of overseas mutual fund capital. FTSE says Korea will be reassessed in its annual review in September.
 
Kim Kyeong-won, a director at Samsung Economic Research Institute, isn't so sure the culprit is corporate governance. "We call it an emerging-market discount, not a Korea discount," he says, adding that the low value of Korean shares is also due to companies issuing too much stock and the preference of Koreans for investing in real estate rather than equities.
 
If the campaign to reform corporations depended entirely on one small fund taking positions in little-known stocks, any Korean discount probably wouldn't shrink much very soon. But Lazard hopes it's boosting the broader market by putting the issue on the table and encouraging lots of big and small companies to improve--not just the ones the fund goes after. And following Jang's and Lee's lead, a new breed of homegrown funds, such as Woori Investment & Securities' private equity fund and SH Asset Management's Social Responsibility fund, have been in the news for their willingness to raise their voices and intervene in management.
 
After they got started with their Lazard fund last year Jang and Lee picked a sleepy textile company for the first investment. In August the fund announced that it had bought 5.1% of Daehan Synthetic Fiber. "They had held no [investor] meetings at all," says Jang. "They refused any kind of shareholder input. The media called them 'The Hidden Family.'" The fund quickly demanded that the board appoint independent directors, sell idle assets, raise dividends and disclose more details of transactions with its affiliates. The stock doubled as traders, sensing a quick kill, piled in. But the fund asked six times for the shareholder register, and each time Daehan refused, landing the conflict in court. Finally, in December, the company gave in. The fund is now advising Daehan on boosting its value. Ironically, where the press once considered Jang antibusiness, some were now calling him a profiteer.
 
Jang and Lee see plenty of other targets in Korea's cloistered corporate suites. Investors don't look much beyond the 20 leading blue chips that account for 65% of the Korea Stock Exchange's market cap. "There are lots of inefficiencies because securities houses are not doing research on these companies," Lee says. "Their chairmen can do anything."
 
The fund has disclosed investments in eight companies and is on the hunt for more. Jang says it has investigated more than 100 companies--he has a dozen analysts checking into potential targets--and hints that it may start going after larger companies. The key issue with each investment is whether improvements in governance will lead to a higher value. "Our strategy is to unlock value," says Lee. "But it doesn't happen overnight."
 
Some companies don't resist. In January the fund said it owned 4.6% of TS Corp., a confectioner, which immediately said it was willing to accept the fund's demands. "We're not hostile to management," Lee insists. "We have to work together."
 
But other companies throw up barricades. Construction materials outfit Byucksan refused the fund's demands to sever business ties with a related party, and in March won a shareholder vote, over the fund's opposition, to reinstate its chairman and auditor. "The company's prepared to accept the demands of the fund as long as they're lawful," says Byucksan's investor relations manager, Chung Jong-woo. "[But] there are other demands that are not really decided by shareholders." That's a common corporate complaint: Activist shareholders should leave managerial decision making alone.
 
The fund's chief investors are U.S. institutions, including university endowments. "There's the opportunity [to earn returns], but they also like the idea of what we're trying to do," says Nicholas Bratt, a Lazard managing director in New York. The performance is shared only with investors; Lazard doesn't publicly disclose results for funds of this type.

Jang is the key to the fund's success. In pinstripes and spectacles, the wiry chain smoker doesn't look like the country's most feared--and respected--corporate street fighter. But when he speaks, the steel in his voice is unmistakable. His image as the country's leading voice for minority shareholders is so entrenched that newspapers rarely call the fund by its proper name, preferring to brand it the "Jang Ha-Sung" fund. (The country's Financial Supervisory Service demanded that newspapers use the correct name to avoid misleading investors into thinking it's a domestic fund.) Unlike foreign funds such as Dubai's Sovereign, the U.K.'s Hermes and the U.S.' Lone Star, which have faced rough rides in nationalistic Korea, the Lazard fund has encountered little opposition in the media, aside from some rumblings about its registration in Ireland. This is partly because it has made clear it is a long-term investor and partly due to the grudging respect that Jang earned after his criticisms of Korean business practices were borne out by the 1997--98 crisis. Moreover, 20% of the funds' investors are Korean institutions.
 
His years in the U.S. equipped Jang for his battles back home. He earned a Ph.D. in finance at Wharton and taught finance there and at the University of Houston. Back in Seoul, he was astonished at how much more developed the economy had become but worried that it was so opaque and tightly controlled. "The economy was in the hands of a few families and bureaucrats," he says. "They were not practicing market [principles]. My question was, 'Would this system produce long-term, sustainable growth?'" The economic crisis would prove that it wouldn't.
 
For his part, Lee had left Korea during the dictatorial Chun Do-hwan (1980--87) regime. He graduated from New York University's business school in 1985, became certified as an accountant and then worked as a fund manager for Scudder in New York, where he began running the firm's Korea Fund in 1991. Later he took his team to Deutsche Bank (nyse: DB - news - people ) and then Lazard. He spends more than half his time in Korea.
 
Meeting in 1997 after the Korea First battle, Jang and Lee quickly agreed to join forces. Backed by Lee's fund and Julian Robertson's Tiger Fund, Jang and his group, the People's Solidarity for Participatory Democracy, waded into a proxy battle with national flagship Samsung Electronics, which had 59 inside directors. The annual shareholders' meeting lasted 12 hours. Later that year he took on Korea's top mobile phone carrier SKT. Other battles followed. The Samsung dispute eventually ended in a legal victory for the controlling Lee family, but today it has just a 13-member board, which includes 7 outside directors. Board meetings are now videotaped. And Jang won major concessions from SKT and later Hyundai Heavy Industries. In 2001 Jang helped establish the Center for Good Corporate Governance, which now does research for Lazard and other firms.
 
Nearly ten years after the economic crisis began, Kim, of the Samsung institute, argues that governance at Korea's leading companies is now on track. "Hyenas serve a very good function: They eat dead animals, stop infection and maintain the health of the gazelle population," he says. "So the fund could do a very good job. But there are many healthy gazelles in this market; the Jang fund should not [exaggerate the poor governance] to foreign investors."
 
Jang and Lee agree that governance has improved but say the fight is far from over. "If we started from zero, we would be around 7 or 8 on a 1-to-10 governance scale," Jang says. "But we started from --3, so now we are at 5 or so. It is still a discounted market, and there are still companies with market caps less than their net asset values."
 
Ever the crusader, Jang doesn't intend to profit from his activities with the fund. Financially secure, he plans to invest the "sizable" income he earns from Lazard in helping governance organizations in other emerging markets. He may have company. Lazard's Bratt says, "If we continue to have a satisfactory experience in Korea, we may take the fund to other parts of the world."