[Reporter’s Notebook] Where Does Faith in an Upward Market Come From?

I recently had an interesting experience meeting two acquaintances who are both very interested in stock investing. One is a “Seohak Ant” (investing mainly in US stocks), and the other is a “Donghak Ant” (focused on Korean stocks). Despite the S&P 500 and Nasdaq repeatedly hitting all-time highs, and the KOSPI ranking first among major countries in year-to-date returns, neither friend has enjoyed much success. This is because they were both caught up in the price volatility of meme stocks and theme stocks. However, the expressions on their faces were quite different, even though both had suffered losses. One friend was filled with confidence that US stocks would rise in the long term, while the other’s face showed clear signs of concern.

The reason for the Donghak Ant friend’s anxiety was likely the recent stall in the KOSPI rally. The market had surged on policy expectations, such as the government’s Commercial Act revision under the banner of “KOSPI 5000,” but recently, the KOSPI has failed to break out of the 3200 range for a month. More investors are now turning back to the US market, as tax reform proposals are moving in the opposite direction of stock market stimulus. It is clear that institutional reforms alone are not enough to reach the “Ocheonpi” (KOSPI 5000) milestone. This is why we need to consider what is required to shed the “Boxpi” (stagnant KOSPI) stigma and instill long-term confidence in the market’s upward trajectory.

To fundamentally improve the Korean stock market, the country must first equip itself with a new engine for growth. Experts believe that the extent to which legacy industries are replaced by artificial intelligence (AI) and robotics will become the key competitive factor among nations. As the growth potential of Korean companies, which have developed around IT and manufacturing, has reached its limit, the nation’s resources should be focused on AI transformation (AX). Tesla became the “favorite stock” among Seohak Ants not simply because it sells electric vehicles well, but due to expectations for future businesses such as humanoids, autonomous driving, and robotaxis. The investment appeal of domestic companies must be enhanced through a shift toward “Physical AI,” which centers on the powerful convergence of manufacturing and AI.

A shift in perception toward the capital market is also required from both companies and the government. Institutional reforms, including the Commercial Act revision, are a process of rebalancing corporate governance, which was previously tilted toward the largest shareholders, to achieve a better balance with shareholder rights. While it is important to listen to concerns from the business community about threats to management control, it is even more critical for companies to recognize shareholders not just as investors but as “owners” of the company, and to improve their awareness of protecting minority shareholder rights.

The government, too, must not forget the disappointment and shock that the tax reform proposal?running counter to its stock market stimulus stance?has caused in the market. Inconsistent policies erode the credibility of policymakers among market participants and render policy measures ineffective. In the long term, this could even worsen social welfare. The government must move beyond the black-and-white logic of “the rich are evil” and boldly pursue reforms that benefit majority shareholders, as long as such systems also allow minority shareholders to prosper. The government must make its position clear: will it treat the stock market as a source of tax revenue, or as a platform for the public to build wealth and replace the myth of invincible real estate?

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