LS shares plummet as chairman’s hasty remark frustrates investors

LS Group Chairman Koo Ja-eun, second from left, inspects the booth of LS Electric on the sidelines of InterBattery 2025 in Seoul, Wednesday. Yonhap

Shares of LS Group and its key affiliates continued to decline on Friday after Chairman Koo Ja-eun unsettled investors with what appeared to be a hasty remark regarding the group's multiple listing plans.

LS Group is preparing to list five affiliates, including LS E-Link and Koc Electric, as part of its efforts to raise capital for business expansion.

“We only have a few limited options to raise funds for small firms’ sustainable growth,” Koo told reporters Wednesday during InterBattery 2025.

“The listing of subsidiaries was not an issue at all in the past. If this is a problem, you do not have to buy the shares after they are listed.”

However, his remarks have drawn strong backlash from investors due to the negative public perception of multiple listing plans by conglomerates.

Industry officials and investors acknowledged the intent behind his remarks but noted that he should have been more cautious with his wording, as the head of the group.

“It appears too hasty for Koo to have made such remarks in public, as such an attitude naturally causes outrage from investors,” an official from a conglomerate said.

According to data from the Korea Exchange, shares of LS Group continue to plummet. Its shares fell by 10.29 percent on Thursday and closed with a 4.24 percent decline on Friday.

Other key affiliates were also hit hard by Koo’s controversial remark. Shares of LS Electric closed with a steep fall of 12.11 percent on Thursday.

Starting this year, the company's shares have surged onto a strong growth trajectory, reaching a high of over 300,000 won ($207) per share last month, driven by a strong earnings outlook. LS Electric shares ended up losing growth momentum in the wake of the latest controversy. The company went on a losing streak with a decline of 3.78 percent on Friday.

LS Eco Energy also closed with a drop of 5.39 percent on Thursday, with a group of smaller affiliates extending a losing streak in stock value during the same period. Shares of LS Eco Energy fell 2.36 percent on Friday from a day earlier.

As of Thursday, the combined market capitalization of LS Group’s nine affiliates dropped by 4.36 percent from a day earlier. This amounts to a fall of 650 billion won, the largest single-day decline for Korea’s conglomerates.

Experts advised Koo to issue a public apology for the rash remark.

“Major U.S. firms are converging their affiliates to boost the stock value of their mother firm, but Korean conglomerates go in the completely opposite direction,” said Kim Dae-jong, a professor of business administration at Sejong University.

Korean firms focus excessively on maximizing their profits by listing as many affiliates as possible, but this does no good for increasing the value of their corporate fundamentals, according to the professor.

“The head of LS Group needs to issue apologies for making the remark and causing damage to investors,” he added.