- Calling on institutional investors’ active role in upgrading Korean capital markets -

Deputy Prime Minister Choi Sang-mok held an Institutional Investors’ Roundtable on Capital Market Advancement on March 29 following the roundtable with experts on March 19 to gather market opinions about upgrading Korea’s capital markets.

This roundtable was attended by major pension funds[1], and institutional investors such as asset management companies, security firms, and insurance companies to exchange views on a variety of policy tasks to achieve capital market advancement, including the Corporate Value-up program as well as individual savings accounts (ISAs).

The meeting attendees welcomed the government’s policy direction for upgrading Korean capital markets and expressed their willingness to actively participate in the initiative, as they anticipate that tackling undervaluation of Korean stock prices could lead to improved performance in fund operation as well.

In particular, they noted that the revision of the stewardship code guidelines on March 14 have provided institutional investors with grounds to encourage companies to participate in value-up programs. Furthermore, they expected that the adoption of value-up guidelines in May and the completion of the Korea Value-up Index development afterwards will further materialize the initiative.   

In addition, attendees pointed out that the corporate tax and dividend income tax reduction measures announced on March 19 would encourage active involvement from businesses and requested materialization of these measures in the near term as well as additional incentives such as easing inheritance tax burdens. Moreover, they emphasized the importance of constantly stepping up demand base, such as raising incentives for ISAs while making steadfast efforts in improving corporate governance through amendments to the Commercial Act with a view to upgrading the stock market.

DPM Choi stressed the government’s policy responses focusing on three main pillars - boosting shareholder returns, establishing fair market order, and expanding demand base - to address the undervaluation of Korean stock prices and bring the capital market to the next level. He asked institutional investors to vigorously increase stock investments in companies making good efforts in corporate value enhancement, so that the Korean capital market can serve as a platform for mutual growth among citizens, businesses, and investors.

Furthermore, he stated that efforts have been made to improve the system, including the introduction of domestic investment-type ISAs at the end of January, and greatly increase their non-taxation limit, aiming to facilitate capital inflows into the domestic stock market through ISAs, with expressing its commitment to ongoing review and implementation of additional regulatory reforms. Regarding the relief of inheritance tax burden, he mentioned the need for sufficient discussions based on social consensus, pledging to continue efforts to devise rational solutions.

Lastly, DPM Choi highlighted that the government will accelerate endeavors to upgrade the capital market while listening to the voices of the market players; as part of these efforts, in addition to the previous roundtables, a series of meetings with foreign investors will be held next week to carry on with fostering communication with the market.

Please refer to the attached files.