Management

Tim Culpan is a technology columnist for Bloomberg Gadfly. He previously covered technology for Bloomberg News.

South Korea's powerful chaebol are not in trouble.

The historic impeachment of President Park Geun-hye has possible replacements and pundits believing they may be in dire straits. Yet investors in the family-run conglomerates, which dominate the country's economic and political landscape, seem to think they'll be just fine.

Shake It Off
Indexes of South Korea's biggest conglomerates rose after a court ruled in favor of ousting the nation's president
Source: Bloomberg
Note: Custom indexes created by Bloomberg Gadfly from members of the Kospi Index.

By late morning in Seoul, within an hour of a court confirming parliament's move to oust Park, an index of Samsung Group stocks was unchanged. So too the Hyundai Group.

While a collection of LG Group shares faltered before the announcement, they recovered more than half those losses to be only marginally down, according to an index of nine companies compiled by Bloomberg Gadfly. A collection of five SK Group companies actually rallied, climbing 1.2 percent.

Market Overweight
South Korea's top four conglomerates account for more than half the Kospi Index's market capitalization
Source: Bloomberg

An easy conclusion to such a muted reaction would that the market has already priced in any downside from Park's ouster, and calls to break up the cozy relationship between family-run conglomerates and the political elite.

That doesn't seem to be the case, either. The chaebol, which account for 50 percent of South Korea's Kospi index by market value, have not only risen since before the drama started to unravel in mid-October, but have outperformed the broader market.

What, Me Worry?
South Korea's four largest corporate conglomerates have outperformed the broader market despite moves to impeach the president and break up the chaebol
Source: Bloomberg

That also means the country's smaller firms underperformed, even as the vice chairman of the nation's biggest company, Samsung Electronics Co., got caught up in the scandal and was eventually indicted.

If the removal of the nation's president and the arrest of its most-powerful executive aren't enough to make investors believe the reign of the chaebol is over, then it's hard to see what could.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Tim Culpan in Taipei at tculpan1@bloomberg.net

To contact the editor responsible for this story:
Katrina Nicholas at knicholas2@bloomberg.net