'Korea Discount' Is Being Resolved... Son Byung-du: "We Will Do Our Best to Maintain the '3000 Era'" (Comprehensive)

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The Korea Exchange and the Korea Financial Investment Association jointly held the "KOSPI 3000 Breakthrough Commemorative Capital Market CEO Roundtable" on the 14th at the Korea Exchange in Yeouido, Seoul. (Provided by Korea Exchange)

[Asia Economy Reporter Minwoo Lee] A discussion was held to maintain the KOSPI 3000 era. It is not a simple overheating but a process of resolving the domestic stock market’s undervaluation factors, and it is expected that overseas capital inflow will continue in the future. To this end, it is argued that members such as companies, individuals, and the government must fulfill their roles.

The Korea Exchange and the Korea Financial Investment Association jointly held the 'KOSPI 3000 Breakthrough Commemorative Capital Market CEO Roundtable' on the 14th at the Korea Exchange in Yeouido, Seoul. Sohn Byung-doo, Chairman of the Korea Exchange, emphasized that market participants including individuals, companies, and the exchange must fulfill their roles so that the rare opportunity does not collapse. Chairman Sohn said, "Companies should strive not to betray the trust of investors who have recently shown affection, and investors should monitor whether companies are committing unfair practices and demand innovation," adding, "The exchange will also strengthen communication with the market and review various opinions to play a role befitting the 3000 era."

To this end, the capital market announced its policy to actively support companies’ efforts to restore vitality. It plans to improve entry barriers focusing on market evaluation and growth potential to make it easier for 4th industrial revolution innovative growth companies to be listed, and to establish a customized support system according to growth stages. It also emphasized that market systems and practices will be actively improved so that investors can trust and invest. Regarding corporate disclosures, it plans to ensure smooth information provision to individual investors and develop various new products to expand the investment base. Chairman Sohn said, "If you stand on the shoulders of giants, you can see more," and added, "I hope the capital market continues its sound growth and South Korea’s economy recovers."

At the event, the KOSPI '3000 era' was diagnosed not as a 'bubble' but as a process of resolving domestic stock market undervaluation factors. The industrial structure has been reorganized around new industries such as semiconductors and secondary batteries, and it is expected that overseas institutional capital inflow will continue.

Kim Shin, CEO of SK Securities, said at the 'KOSPI 3000 Breakthrough Commemorative Capital Market CEO Roundtable' jointly held by the Korea Exchange and the Korea Financial Investment Association on the 14th at the Korea Exchange in Yeouido, Seoul, "Real assets are not priced low even globally, but undervaluation persisted uniquely," emphasizing, "Geopolitical risks, low dividends, corporate governance issues, high earnings volatility, and low stock holdings compared to real estate are undervaluation factors that have shown significant removal possibilities over the past year."

It is analyzed that the perspective on corporate value itself has changed. In the past, corporate value was evaluated mainly by traditional price-earnings ratio (PER) and price-to-book ratio (PBR), but recently, performance improvement, technology, and price-earnings growth ratio (PEG) have become new standards. CEO Kim said, "The paradigm for viewing value has focused on the future," and added, "From this perspective, it is difficult to argue that the Korean stock market is a bubble simply because it doubled in one year, and considering the 2007 breakthrough of 2000 points, the speed is not that fast."

Now, it is expected that additional growth beyond the domestic stock market undervaluation known as the 'Korea Discount' can be anticipated. Taejin Park, CEO of JP Morgan Securities, cited ▲ high volatility in dividends or stock returns ▲ geopolitical factors ▲ weak corporate governance as undervaluation factors behind the domestic stock market. CEO Park explained, "The current situation emphasizes whether a premium can be received rather than a discount," adding, "The spotlight on untact (contactless) and IT stocks, Korea’s excellent response to COVID-19, and various government policies can provide a premium to the Korean stock market."

Meanwhile, Na Jae-cheol, Chairman of the Korea Financial Investment Association, expressed concern about the excessively high proportion of individuals in the current stock market. While individual investors have the power to lead the market, he pointed out the need for a proper balance with institutions and pension funds. Chairman Na said, "The proportion of performance dividend products among domestic retirement and personal pension assets is 10%, and stocks are even lower," adding, "A high proportion of institutions based on pensions is necessary to minimize market concentration and for individual investors to continuously achieve good results."

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