[Opinion] An Investor's Wish for Presidential Candidates

▲Seojun Sik, Professor of Economics, Soongsil University

According to recent data released by the Bank of Korea (Funds Circulation in Q2 2021), the value of domestic and foreign stocks and funds held by Korean households has exceeded 1,100 trillion won. Until 2019, the number of shareholders of Korea's representative company Samsung Electronics was only about 600,000, but now it has easily surpassed 4 million. Having already joined the ranks of advanced countries, the proportion of stocks held by Korean households is expected to continue rising.

The more the funds of the people flow into the corporations of a country, the greater the number and competitiveness of those companies will be, creating a win-win effect where the wealth of the investing citizens grows alongside the growth of these companies. Since the Dutch East India Company, the world's first joint-stock company, defeated the mighty Spain and gained global dominance, the national wealth and global economic hegemony of capitalist countries worldwide have been determined by the competitiveness of their stock companies. Considering this history, the correlation between the stock market and national wealth cannot be ignored.

However, recently, the mood among Samsung Electronics investors has not been bright. The stock price, which once approached 100,000 won, has fallen to around 70,000 won. Although the author does not hold Samsung Electronics shares, there is concern that the favorable situation?where household funds have finally been moving into the stock market since the 2020 Donghak Ant Movement?may be hindered.

In this situation, the government's interest in the Korean stock market is regrettably not very strong. It is acknowledged that various tax policies have somewhat redirected funds that previously flowed only into real estate back into the stock market. However, compared to other advanced countries, Korea's stock market system still has many handicaps, and there is no visible effort to improve this.

Above all, although the Korea Exchange (KRX) is officially no longer a public institution, it is effectively still a subsidiary of the Ministry of Economy and Finance, and its reform is urgent. For a long time, there has been no sign of change or innovation, giving the impression that it is isolated from the changes of the times. One reason why most Korean stocks, including Samsung Electronics, are still traded at a discount known as the "Korea Discount," compared to U.S. smartphone companies or Taiwanese semiconductor firms, is the problem with the Korea Exchange. If the world’s leading exchanges are department stores, the Korea Exchange has become a traditional market. While the author usually favors the products of traditional markets for their quality-to-price ratio, Korean luxury companies like Samsung Electronics now hope to be traded at their true value on a department store-like exchange.

First, like most advanced exchanges, the Korea Exchange must be listed itself. Then, it should pursue alliances such as share exchanges or M&A with other leading exchanges. Ultimately, like Samsung Electronics or Hyundai Motor Company, the Korea Exchange must become a multinational corporation operating on a global stage. As the status and reputation of the Korea Exchange rise, more global investment funds and more domestic funds will flow into Korean companies, creating a win-win effect. The practice of appointing senior officials from the Ministry of Economy and Finance, who lack market experience, to leadership positions in the Korea Exchange and related institutions must disappear for the sake of national interest.

In a few days, the Beijing Stock Exchange will be newly launched in China. Despite having three large exchanges in Hong Kong, Shanghai, and Shenzhen, China is taking on new challenges. Our government should also quickly let go of the Korea Exchange and take on challenges such as launching new exchanges to nurture small and medium-sized enterprises with limited financial power. For this presidential election, I earnestly hope to see pledges to reform Korea’s outdated stock market system. This is the final button in the process for Korea to become a leading global power.

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