[The Editors' Verdict] A "Major Shareholder" Who Can't Even Afford a Home

In the asset market, real estate prices have risen to the point of being called a bubble. In particular, apartment prices in Seoul and some other areas have more than doubled in the past three years. Despite the government implementing dozens of measures to curb real estate prices, they have not been controlled. Four years ago, it was possible to purchase a home by "Yeongkkeul" (borrowing to the limit, even to the extent of one's soul), but now it is difficult to even rent a jeonse (long-term deposit lease) through Yeongkkeul, and people can only afford monthly rent with their salaries. Questions continue to arise about whether this is fair.

So, where can individuals, considering some risks, earn returns next to real estate? The answer is stocks. Especially since the COVID-19 pandemic, statistics show an increase in account openings among people in their 20s and 30s. These newcomers are now called "Joorini" (a combination of "ju" from "jusik" meaning stock investment and "rini" from "child"). Employment is difficult, people spend more time at home due to COVID-19, and the market is flush with liquidity. Those investing in stocks at this time are not seeking unearned income. Since stocks are risky assets, investors need to study not only the domestic market but also overseas markets. There is also an aspect of investing in domestic companies. Korean citizens are buying the value of Korean companies.

Looking at national wealth statistics, the economy is growing, but the proportion occupied by land and buildings continues to soar at 76%. In the long term, investing in stocks could change the composition of net national assets for people in their 20s and 30s. Over the past 10 years, the economy has grown by about 45%, but Korea's KOSPI has risen only about 0.7% within a box range, and KOSDAQ has increased by 31%. This means that the stock market has not reflected the economic situation and it has become difficult to generate returns.

During this period, related systems have changed. When the financial tax system was reformed, the deduction limit for the newly introduced domestic stock capital gains tax was raised to 50 million won. Also, the temporary ban on short selling, excluding market makers, was extended by six months until next year. The recent issue concerns the criteria for major shareholder capital gains tax.

Regarding the major shareholder criteria for listed stocks, until July 2005, the family combined standard was a shareholding ratio of 3% or a market capitalization of 10 billion won or more. Since then, this criterion has gradually lowered: based on KOSPI, from a 2% shareholding or 5 billion won market cap to 1% or 2.5 billion won → 1% or 1.5 billion won → 1% or 1 billion won, and so on. From April next year, for KOSPI, it will be restructured to a 1% shareholding or market cap of 300 million won or more, and for KOSDAQ, a 2% shareholding or market cap of 300 million won or more.

Looking at past cases, whenever the major shareholder capital gains tax criteria changed, individuals massively sold stocks in December when the shareholder registry was closed. In 2016, 1.4446 trillion won was sold on KOSPI and 143.2 billion won on KOSDAQ. In 2017, 3.6645 trillion won and 1.4672 trillion won, in 2018, 1.2339 trillion won and 345.5 billion won, and last year, 3.8275 trillion won and 995.5 billion won were sold. If the major shareholder criteria are relaxed to a market cap of 300 million won as planned next year, the number of major shareholders will increase from 20,000 to over 100,000. The scale of sales will be much larger than before, and uncertainty in the stock market could expand. Large amounts of money could flow out to overseas stock markets.

Three hundred million won is certainly a large sum. However, compared to the rise in real estate prices, it is not enough to be considered a major shareholder. As mentioned earlier, real estate prices have risen so much that the average sale price of an apartment in Seoul is 1 billion won. In other words, selling one house in Seoul would make you a major shareholder in three stocks. Isn't that strange? Recently, financial tax systems have been reformed, and from 2023, stock capital gains tax will be levied at 20% on gains exceeding 50 million won. Therefore, if the current major shareholder criteria of over 1 billion won remain and the tax reform is implemented in 2023, it would naturally follow.

Kim Sangbong, Professor of Economics, Hansung University

This content was produced with the assistance of AI translation services.