Seo Yuseok, Chairman of the Korea Financial Investment Association, "Committed to Resolving Korea Discount"

1st Anniversary Press Conference
Selection of 5 Key Tasks
"Establishing Measures to Enhance Capital Market Valuation"

"We will do our best to resolve the chronic issue of the 'Korea Discount' in our country's stock market."

On the 23rd, Seo Yoo-seok, Chairman of the Korea Financial Investment Association, made this statement while announcing five key tasks at a press conference marking his first anniversary in office.

To resolve the Korea Discount, a ‘Capital Market Valuation Enhancement Plan’ will be established to encourage shareholder return policies such as increasing dividend payout ratios and share buybacks and cancellations by listed companies. Additionally, plans include actively proposing ‘tax incentives’ for long-term direct and indirect stock investments, including public equity funds.

He emphasized, "Tax incentives related to the capital market are a ‘productive incentive and motivation for national asset formation’ that create greater effects than the loss of tax revenue through resolving the Korea Discount, increasing household assets, and fostering corporate growth." As part of this, he added, "We will continue to promote the introduction of Business Development Companies (BDC) to supply capital to small and venture companies and provide more stable unlisted investment options."

He also explained that changes in the pension market must accompany efforts to resolve the Korea Discount. He said, "Korea's pension income replacement rate is about 43%, ranking among the lowest in the OECD," and added, "A ‘capital market-based virtuous cycle structure’ is needed, where improved private pension returns help private pensions share the burden of national retirement income, contributing to resolving the Korea Discount and addressing the depletion of public pensions simultaneously."

Chairman Seo cited ‘support for national asset formation and management’ as the second of the five tasks. The government is actively promoting ‘expansion of national asset formation through the capital market,’ including strengthening tax support for Individual Savings Accounts (ISA) and introducing new types.

He stressed, "It is time to introduce new financial systems that provide ‘the driving force for citizens to steadily accumulate assets’ through reasonable tax incentives like the ISA," adding, "This can also contribute to resolving the Korea Discount by encouraging long-term investment and reducing capital market volatility."

The third task identified was ‘discovering growth engines for the financial investment industry.’ He said, "We will faithfully fulfill the capital market’s fundamental roles of ‘supplying venture capital and managing citizens’ assets’ while preparing new growth engines for the industry." He emphasized, "We will establish and support the overseas expansion base for securities companies and strengthen global business capabilities by expanding foreign currency-based businesses." He also explained, "Domestic investment banks (IB) will compete with global IBs, and small- and medium-sized securities firms will be proposed measures to take a step forward through expanding the mid-sized specialized securities firm system."

Along with this, there are plans to promote the enhancement and revitalization of the stagnant public fund competitiveness. He emphasized, "We will promote the listing and trading of existing public funds without index linkage requirements, expand the lineup of foreign currency money market funds (MMF), introduce period redemption funds, and support the activation of public funds with differentiated returns and private fund-of-funds."

The fourth task was ‘global expansion of the financial investment industry.’ He said, "We will strive for the overseas expansion of financial investment companies and the transformation of Korea into a global financial hub," adding, "Finance will no longer remain a domestic industry but will become an export industry and a key industry like automobiles and semiconductors, contributing significantly to Korea."

He stated, "During my term, I will devise various forms of support measures for global expansion," and emphasized, "Regarding financial hubs, emerging financial centers such as Dubai and Dublin are rapidly appearing, so we must hurry with policies to avoid losing ground in global financial competition."

Finally, Chairman Seo emphasized strengthening ‘risk management, internal control, and investor education.’ He said, "Due to the impact of high interest rates and high inflation, the capital market experienced ups and downs and increased asset price volatility last year, continuing difficulties for the market and industry." He added, "Although the interest rate hike cycle is expected to end this year with a gradual decline, high interest rates are expected to persist for a considerable period, and vulnerabilities in the financial market and real economy remain, so we must not let our guard down."

Chairman Seo said, "Regarding real estate project financing (PF), the worst phase has passed due to the government’s active market stabilization measures, but the situation is still not safe," and added, "The ‘ABCP purchase program’ will be extended until the end of February next year to serve as a market buffer." He further explained, "We will actively cooperate with the government in identifying losses by PF project sites, selling non-performing loans, and fundraising, as well as in monitoring and responding to the PF status."

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