President opens up about ETF portfolio, vows to keep investing throughout his term
President Lee Jae Myung on Thursday renewed his pledge to boost market transparency and tackle structural problems, as South Korea’s benchmark Kospi index hit another record high.
In a meeting with stock analysts from 16 South Korean securities brokerages, Lee stressed a need to "normalize the capital market," making it more predictable and less volatile by addressing opacity and fostering an atmosphere that restores individual investors' trust.
"We need a predictable and rational market environment free of unfair trade practices, opaque management practices and irrational decision-making," Lee said during the meeting at his office.
"What I had in mind was to eliminate stock price manipulation and unfair practices regarding corporate disclosures, and we are taking strides on that front."
Lee also highlighted the ruling bloc-led revision of the Commercial Act, which expanded the fiduciary duty of board members to protect the interests of minority shareholders. The ruling bloc also passed another revision to introduce a cumulative voting system for listed companies with assets of more than 2 trillion won ($1.44 billion) to empower smaller shareholders in electing corporate board directors.
"There is a saying that, 'The smartest investors are the quickest to leave the South Korean stock market.' We should work to rephrase it as, 'The smartest investors are the quickest to return to the South Korean stock market,'" Lee said.
Later on Thursday, the presidential office revealed that Lee's investments in two exchange-traded funds have yielded a 26.4 percent return since his inauguration in June. Lee's office also unveiled that he plans to invest a total of 100 million won throughout his term in baskets of South Korean stocks. Lee's spokesperson Kang Yu-jung said in a briefing Thursday that the revelation is a sort of assurance to stock investors that his bid to strengthen the capital market will remain consistent.
Since his inauguration in June, the liberal president has set his sights on boosting South Korea's domestic stock market by eradicating the "Korea Discount."
The market has since taken a bullish turn.
The Kospi closed 1.4 percent higher on Thursday at 3,461.30 points, crossing the 3,460 mark for the first time. Until a 1 percent dip on Wednesday, the Kospi had seen an 11-day winning streak. As of Thursday, the market had rallied 8.6 percent in September.
Leading the bull run were tech shares such as Samsung Electronics, whose shares were trading above 80,000 won for the first time since mid-August. Samsung Electronics, the chip-to-mobile giant, closed 2.9 percent higher, while memory chip-maker SK hynix rose 5.8 percent to a record high.
Tackling malpractices such as stock manipulation and the spread of misleading information has been one of Lee's policy goals aimed at addressing downside factors in South Korea's stock market.
During a news conference to mark his 100th day in office on Sept. 11, Lee called for the elimination of factors that cause distrust in the market, pledging to confiscate not only illegal gains but also the principal invested by deceptive market actors. He also claimed that South Korean pension funds had allocated only a small amount to domestic shares due to the lack of investor trust in them.
"Stock manipulation and false disclosures will be punished severely," Lee said during the conference a week ago. "We will clearly show that stock price manipulation will lead to ruin and disgrace."
In addition, Lee has pointed to geopolitical tensions on the Korean Peninsula and the concentration of wealth in the housing market as factors hindering the stock rally. Without these hurdles, the Kospi could hit 5,000 points during his five-year term, Lee has said.
The Lee administration's five-year blueprint indicated that South Korea's inclusion in the MSCI Developed Market Index is another policy goal and that the administration is poised to map out plans to achieve it.
consnow@heraldcorp.com
