On September 25, 2025, South Korea’s financial markets were rocked by a pair of dramatic developments involving some of the nation’s most prominent companies. In one corner, KCC—the industrial heavyweight—announced a major exchangeable bond (EB) issuance plan that sent its stock price tumbling and left investors reeling. Meanwhile, NAVER, the tech giant, found itself in the spotlight after reports surfaced about a sweeping integration with Dunamu, which triggered a whirlwind of trading activity and exposed vulnerabilities in their trading systems.
Let’s start with KCC. According to the Korea Exchange, KCC’s announcement of a 43 billion KRW shareholder EB issuance marked its largest such move to date. The company’s shares plummeted by 11.75% to close at 368,000 KRW, with the price having dropped as much as 17% during intraday trading. For context, this was KCC’s steepest single-day decline since February 15, 2022, when an earnings shock wiped out around 700 billion KRW in market capitalization—a sobering reminder of just how quickly fortunes can shift in the world of big business.
The decision to issue EBs was particularly jarring for investors. As reported by Hankyung, KCC opted to make 9.9% of its 17.2% treasury shares available for the EB issuance, a move worth about 43 billion KRW. The remainder of its treasury shares—3.9%—would be canceled, while 3.4% would be allocated to the company’s employee welfare fund. Many investors, however, had been hoping for a full cancellation of treasury shares, which would have boosted earnings per share and potentially lifted the stock price. Instead, the EB plan was seen as a letdown, triggering a wave of selling by disappointed shareholders.
But why all the fuss about exchangeable bonds? EBs give holders the right to swap the bonds for company shares (or, in some cases, shares of another company) at a future date. For the issuing company, EBs offer a way to raise capital at a lower interest rate than standard bonds. For investors, they provide the allure of regular interest payments and the potential for stock-related gains if the share price rises. The catch? If the bonds are converted into shares, existing shareholders see their ownership diluted—a prospect that rarely sits well with the market.
This dilution risk was front and center for KCC’s investors, especially since the company had been riding high on strong earnings and a positive outlook for its silicon business. Just last month, analyst Yoon Jae-sung from Hana Securities predicted KCC’s operating profit would hit a record 522.7 billion KRW in 2024, up 11% from the previous year. The optimistic forecast even prompted a target price hike from 440,000 to 520,000 KRW. Yet, all that optimism evaporated overnight as the EB news broke, leaving shareholders with a bitter taste.
KCC isn’t alone in facing this conundrum. Earlier this year, other major firms like Kakao Pay and Taekwang Industrial Co. also saw their shares nosedive after announcing large EB issuances based on their own treasury stocks. On June 30, 2025, Taekwang Industrial revealed plans to issue EBs representing 24.4% of its treasury shares—worth 32 billion KRW—leading to an 11.24% drop in its share price. Similarly, Kakao Pay’s stock slumped nearly 10% after its second-largest shareholder, China’s Alipay, announced a 6.3 billion KRW EB issuance based on an 8.47% stake. The pattern is clear: investors are wary of moves that could water down their stakes.
Underlying this trend is a broader debate about shareholder rights and corporate governance in Korea. The government’s push to make the cancellation of treasury shares mandatory—part of the third amendment to the Commercial Act—has prompted some companies to preemptively issue EBs as a way to sidestep the new rules. This maneuver, while legal, has drawn criticism from analysts and investors alike. As Lee Sang-heon of iM Securities put it, "Acquiring treasury shares is viewed as a key method of returning profits to shareholders, alongside dividends. However, in Korea, these shares are often misused to strengthen the control of major shareholders." By reducing the number of shares available for voting, companies can effectively consolidate power, sometimes at the expense of minority investors.
Park Hyun-jung of Daishin Securities highlighted the contrast with the U.S., where share buybacks typically result in cancellations, thus reducing the total share count and boosting earnings per share. In Korea, though, companies often hold onto their treasury shares, using them as a buffer for management or as a tool for generating profits through future sales. If the law is amended to require cancellation, Park argues, it could lead to a more shareholder-friendly environment by making buybacks genuinely value-enhancing.
While KCC was grappling with investor backlash, NAVER was dealing with a different kind of turmoil. As reported by Hankyung, NAVER’s stock soared by 6.58% to 243,000 KRW, peaking at 252,500 KRW, after rumors swirled about a potential merger with Dunamu. The speculation centered on a comprehensive share swap that would see Dunamu become a wholly owned subsidiary of NAVER Financial, itself a NAVER affiliate. The deal, if finalized, would allow NAVER and its financial arm to expand their reach from shopping and banking into the burgeoning world of digital asset trading.
The excitement, however, was tempered by technical hiccups. The integration of NAVER and Dunamu’s trading platforms led to instability, causing trading delays and operational headaches for users. Both companies acknowledged the issues, with NAVER forming a task force to address the glitches and promising to restore stability as soon as possible. The hiccups raised concerns among investors about the reliability of the merged platform, especially as trading volumes surged on the back of the news.
Despite the challenges, the potential for a NAVER-Dunamu super-app is tantalizing. By bringing together e-commerce, fintech, and virtual asset trading under one roof, the combined entity could set a new standard for digital services in Korea. Dunamu is reportedly preparing to inform its major shareholders about the planned share swap, and both sides are working on the final details, including the exchange ratio for the unlisted shares.
As with KCC, the underlying issue is one of trust and transparency. NAVER’s spokesperson told Hankyung, "We are currently verifying the facts," a statement that did little to quell the market’s curiosity. Investors and users alike will be watching closely to see whether the integration delivers on its promise—or whether further turbulence lies ahead.
These twin dramas underscore the high stakes and rapid shifts that characterize South Korea’s corporate landscape. Whether it’s the delicate balance between shareholder rights and management control, or the race to build the next digital powerhouse, one thing is certain: in today’s market, fortunes can change in the blink of an eye.
