Software

South Korean regulators provoke a collapse in shares of local tech giants

Regulatory authorities in South Korea have criticized the activities of the Internet giants, warning them against using their dominant market position to fight competitors. Investors reacted pessimistically.

Source: freepik.com

Source: freepik.com

The actions of regulators provoked a sharp drop in the shares of South Korean IT companies, raising concerns among investors related to regulatory risks. Thus, Kakao’s assets fell 10% on September 8 and stood at 138.5 thousand won. The fintech company has not experienced such a fall since 2012. Another victim of agency activity was Naver, which is the most popular search engine in the country – the company’s assets fell by 7.9%, their value was 409.5 thousand won.

One of the reasons for investor pessimism was the statement by the head of the Democratic Party, Song Young Gil. In his opinion, Kakao should not act like a chaebol. This word is used in South Korea for giant conglomerates such as Samsung, LG or Hyundai. Another problem for tech giants was the actions of financial departments. Internet companies that advertise financial products should pay more attention to consumer protection, according to a statement from the Korea Financial Services Commission.

Until now, shares of Korean IT companies have shown positive dynamics. In particular, Kakao’s assets have risen in price by 78% over the past year. This was facilitated by the placement of shares of its subsidiaries on the Seoul exchange: investors were attracted by the game publisher Kakao Games and the fintech division of Kakao Bank. Search engine Naver failed to reach such heights, however, its shares rose by 32%.

Chinese regulators have been particularly active lately. Alibaba, Tencent and Meituan have been fined billions. Beijing significantly limited IPOs for Chinese players, and also took a number of government measures.

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About the author

Robbie Elmers

Robbie Elmers is a staff writer for Tech News Space, covering software, applications and services.

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