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Photo = Yonhap news |
[Alpha Biz= Paul Lee] SEOUL, June 10 — Shares of major South Korean retail chains plunged on Monday amid growing concerns over potential regulatory tightening that would require large supermarkets to close on public holidays instead of weekdays. The proposed legislation has sparked fears of reduced profitability, even as analysts suggest the actual impact may be limited.
On the Korea Exchange, shares of Emart fell 8.28% to close at KRW 83,100, while Lotte Shopping declined 9.03% to KRW 75,600. These losses reversed recent gains driven by expectations of domestic demand stimulus under the new government, including a second supplementary budget.
The sell-off was triggered by comments from lawmakers in the ruling party, notably Rep. Oh Se-hee of the Democratic Party, who announced plans to push for legislation mandating that large retailers observe their mandatory twice-monthly closures on public holidays rather than weekdays. Currently, local governments have the discretion to designate closure days, often opting for weekdays.
Rep. Oh, a first-term lawmaker and former head of the Korea Federation of Micro Enterprise, has long advocated for stricter regulation of large-scale retailers to protect small businesses. With the proposal gaining visibility, market sentiment quickly shifted from stimulus optimism to concerns over regulatory headwinds.
However, many market experts believe the reaction was overblown. Lee Jin-hyup, an analyst at Hanwha Investment & Securities, noted that the proposed measure was not part of the new administration’s official policy platform. “It is clear that stricter regulations on large retailers are not currently a top priority for the government,” he said.
Lee also estimated the potential financial impact to be minimal, even if the regulation is enacted. “If the bill passes, we estimate a sales decline of approximately 0.8% for Emart and 0.6% for Lotte Mart,” he explained. “This would translate to an operating profit reduction of around KRW 10 to 20 billion.”
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
