Hyundai Motor shares rally on rumors of group restructuring

Shares of Hyundai Motor, the nation’s largest carmaker, and its affiliates, continued to rally Monday amid high market expectations of the South Korean conglomerate’s possible revamp of its governance structure.

Share prices of Hyundai Motor closed at 170,000 won ($152) on Monday’s trading, a 8.8 percent increase from a week ago. Kia Motors and Hyundai Mobis also saw their share prices surge 5 percent and 11 percent, respectively, from a week ago.

The rallies have followed President Moon Jae-in’s chaebol reform drive reflected in his choice of two shareholder activists for public offices last week. Moon named Kim Sang-jo, a professor at Hansung University to head the nation’s antitrust watchdog and Jang Ha-sung, a business professor at Korea University, as chief of staff for policy, a position he revived for a swift change in overall economic policies. Kim and Jang, both nicknamed “chaebol snipers,” are well known activists here for their years of efforts in raising public awareness on shareholders’ rights and questioning the legitimacy of conglomerate owners’ transfer of wealth to their children.

Market expectations rose quickly over Hyundai’s possible restructuring with Kim, the designate for the head of the Fair Trade Commission, singling out the auto giant’s complex cross-sharing holding structure. Hyundai Mobis, an auto parts maker, owns a 20.8 percent stake in Hyundai Motor. The carmaker holds 33.8 percent of Kia Motors, which has a 16.9 percent stake in Hyundai Mobis.

This cross-shareholding structure buttresses Chairman Chung Mong-koo’s grip over the group. He holds relatively small stakes -- 6.96 percent of Hyundai Mobis and 5.17 percent of Hyundai Motor.

Market experts have suggested that the group may attempt to establish a holding company structure if the new government publicly questions the transparency of its corporate governance. The restructuring could cost Hyundai more than 5 trillion won. But such major work could contribute to Hyundai’s efforts in enhancing its corporate value.

Hyundai, meanwhile, flatly denied the market expectation and reports. The company has yet to decide on the plan, it added. 

By Cho Chung-un (christory@heraldcorp.com)