[비즈한국] With the presidential election just two weeks away, companies are seeing their fortunes fluctuate due to the policy competition between candidates trying to win over the hearts of Busan voters. At the center of this are the Korea Development Bank (KDB) and HMM011200. Presidential candidates are mentioning these companies as they compete to pledge they will turn Busan into an economic hub. Candidate Lee Jae-myung proposed, "Relocating the Korea Development Bank is realistically difficult, so we will relocate HMM (of which the government is the largest shareholder)," while candidate Kim Moon-soo stated, "We will push forward with the relocation of the Korea Development Bank (a previous pledge by former President Yoon Suk-yeol) exactly as originally planned."
In reality, the Korea Development Bank (KDB) has internally decided to divest its stake in HMM. KDB Chairman Kang Seok-hoon, who has about a month left in his term, is currently pushing to reduce the stake while HMM's stock price remains strong. However, since some government equity is required to push for HMM's relocation to Busan, there is speculation that if candidate Lee Jae-myung is elected, KDB's decision to sell its HMM stake could be overturned.
HMM hits 52-week high, increasing the need for stake sale
HMM's stock price reached 23,700 won during trading on the 15th, hitting a 52-week high. The background for this strong performance is anticipation regarding its earnings. In the first quarter of this year, HMM recorded an operating profit of 613.9 billion won, a 51% increase compared to the same period last year. This is being interpreted as a result of the tariff truce agreement between the U.S. and China.
This has acted as a positive factor for HMM, which handles a high volume of goods destined for the U.S. If the shipping volume, which had been suppressed by the U.S.-China trade conflict, is released, shipping rates are likely to rise, significantly increasing HMM's operating margin. Some interpret the remarks by Democratic Party presidential candidate Lee Jae-myung regarding the "relocation of HMM to Busan" and "pioneering an Arctic route" as catalysts for the stock price rise.
For the largest shareholder, KDB, the sale has become that much more urgent. If HMM's stock price rises, it places a burden on the bank's financial soundness. It is projected that KDB's BIS capital adequacy ratio, currently at around 13.9%, will drop to the financial authorities' recommended level of 13% once HMM's stock price hits approximately 25,000 won.
In fact, KDB Chairman Kang Seok-hoon stated during a press conference in Silicon Valley last April, "For every 1,000 won increase in HMM's stock price, the BIS ratio drops by about 9bp (1bp=0.01%)," expressing his will to sell the HMM stake as soon as possible.
Relocation using government stakes?
However, candidate Lee Jae-myung is taking the opposite approach, using the HMM stake held by KDB as justification for his pledge to relocate the company to Busan. Currently, KDB holds a 36.02% stake in HMM, and the Korea Ocean Business Corporation holds 35.67%. If you include the stakes held by the National Pension Service and the Export-Import Bank of Korea, the government stake exceeds 75%.
In fact, the relocation of HMM's headquarters has consistently appeared as a campaign pledge. During the Hyundai Merchant Marine era, then-Busan Mayor Suh Byung-soo actively pursued it, and in 2021, former Minister of Oceans and Fisheries Kim Young-choon, who ran for Busan mayor, also made it a campaign promise.
Even if some of KDB's stake is sold, the government would remain the largest shareholder due to the stakes held by entities like the Korea Ocean Business Corporation. However, as the government's total stake decreases, controversy over "interference in private corporate management" could intensify.
A financial authority official pointed out, "Since HMM is a listed company, the relocation of its headquarters should be decided at the company level. If it moves based on a presidential candidate's pledge, it will likely lead to controversy within the board of directors," adding, "(The presidential candidates) seem to be holding up HMM instead of KDB to appeal to voters in Busan."
The Democratic Party stated that they would fund the relocation to Busan using HMM's retained earnings, which could draw criticism that it is inappropriate for a presidential candidate to propose using a private company's funds for regional relocation.
The aforementioned official added, "Chairman Kang Seok-hoon, who has about a month left in his term, has decided to sell and is pushing for it. If a new administration comes in and truly pushes for HMM's relocation to Busan, wouldn't the party looking to acquire the HMM stake see it as a negative situation involving political interference? It is clear that HMM's relocation to Busan is not beneficial to KDB's decision to sell its stake."