To elevate the Korean stock market beyond the 'Korean discount' and achieve 'K-Premium,' experts emphasize the need for enhanced transparency in market information and effective shareholder return policies. They argue that securing market confidence in the long-term benefits of corporate growth is essential for attracting capital from both retail investors and large foreign institutional investors. A consistent government policy is also deemed necessary.
"Korea must enhance market trust to compete globally"
During the 'Korea Premium Week 2026' held on September 28 at The Grand Lotte Seoul, domestic and international institutional investors expressed their agreement with the South Korean government's direction for enhancing stock market value. However, they stressed that attracting long-term investment funds requires consistent policy implementation and tangible return strategies that shareholders can perceive.
Jude Abdel-Majid, co-head of BlackRock's Global Partners Office, stated, "The global market is competing not only on the economic fundamentals but also on governance and investor protection levels. Market trust is built not through reforms and policy directions but through predictability, consistency, and execution capability." He emphasized that the key is to instill long-term investors with the belief that this system will work for them in the next 10 or 20 years.
Winnie Kwan, Chief Investment Officer at Capital Group, called for increased transparency in corporate capital allocation and predictability in shareholder return policies to achieve K-Premium. She noted that South Korea is entering a strong growth phase, particularly in technology sectors like semiconductors and AI. Companies like Samsung Electronics and SK Hynix, which have significantly improved their free cash flow generation capabilities, should focus on clearly communicating future investment directions, business plans, and capital structures to shareholders, rather than just increasing short-term dividends.
Kwan also highlighted the need for reforms in corporate law and share buyback regulations, as well as tax reforms related to dividends and inheritance. She stressed that maintaining the current direction while ensuring that stakeholders, including the government, National Pension Service, Korea Exchange, and institutional investors, share the same goals and continuously communicate with the market is crucial for establishing a virtuous cycle.
The subsequent panel discussion featured various experts sharing their views on capital market reforms. Lee Dong-seop, head of the National Pension Service's Fiduciary Responsibility Office, stated, "The board of directors must actively consider how major corporate decisions impact ordinary shareholders and establish a system to explain this to the market." He also pointed out that institutional investors need a systematic foundation to engage in collective shareholder activities rather than acting individually.
Lee Seung-woo, head of research at Eugene Investment & Securities, emphasized the importance of enabling the market to predict how corporate growth and profits will translate into shareholder benefits in the long term. He called for clear principles of resource allocation in corporate value-up plans and building trust that corporate performance will return to ordinary shareholders in a fair and predictable manner, alongside improving access to information for investors.
Government to Enhance Long-term Capital Inflow and Oversight
The government is set to actively respond to these demands. Byun Je-ho, head of the Financial Services Commission's Capital Market Bureau, announced plans to establish a long-term investment lineup from growth funds to retirement pensions, and to create a productive financial ISA separate from existing ISAs to broaden the inflow of long-term funds into the domestic stock market. He promised to strengthen market oversight through securing capital market stability, enhancing management of credit financing and margin trading, and revising contingency plans, while also creating an environment where companies can more actively return profits to shareholders.
Byun also indicated a strong restructuring of the KOSDAQ market, which has been plagued by a mix of promising and struggling companies that foster overall market distrust. He stated, "We will promote the listing of promising innovative companies while decisively delisting penny stocks and low market capitalization firms, and establish a 'KOSDAQ Select' segment to attract institutional funds. Rather than responding to regulatory circumvention with new regulations, we will execute consistent policies based on the belief that 'sunlight is the best disinfectant.'"
Korea Premium Week is a joint public-private event co-hosted by the Financial Services Commission and the Korea Exchange, officially opening on this day with approximately 400 attendees, including government officials, the head of Japan's Financial Services Agency, and key global investors from firms like Goldman Sachs and BlackRock, as well as representatives from international organizations like UN PRI.
President Lee Jae-myung, in his congratulatory message, stated, "The capital market is not just about transactions; it is a key driver that awakens the hidden potential of the nation and breathes life into future innovative industries. The government will continue to create a transparent and fair market environment to ensure that South Korea can leap forward as the most attractive capital market in Asia."
* This article has been translated by AI.
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