Hwang Sungyeop, Head of Korea Financial Investment Association, Expresses Concern Over 'Retail Investor Frenzy'... "Institutional Share Must Grow"

"Establishing Institutional and Pension Investment Is Essential"

Hwang Sungyeop, Chairman of the Korea Financial Investment Association, stated, "A society where everyone is obsessively focused on investing is not a healthy one." He emphasized, "To address this, the proportion of institutional investors needs to increase, and an indirect investment model through pensions must become established."

Hwang Sungyeop, Chairman of the Korea Financial Investment Association, is speaking with reporters at the association building in Yeouido, Seoul, on the 23rd. Korea Financial Investment Association

On the afternoon of the 23rd, at the Korea Financial Investment Association building in Yeouido, Seoul, Chairman Hwang expressed his concerns to reporters about the current stock market, where there is a heavy concentration of individual investors.

He said, "Korea has a unique phenomenon where the proportion of individual investors is excessively high. While this is beneficial when the market rises, when it falls, people inevitably face difficulties. Many have expressed concerns about leveraged investments in single stocks."

As a way to increase the share of institutional investment, he suggested funds rather than ETFs. Chairman Hwang explained, "ETFs have the advantage of offering a wide variety, but the problem is that fund managers have no discretion. Since they are structured so that assets must be sold when money flows out, in that respect, funds are good products for long-term investment. The proportion of capital flowing into funds or pension funds should be increased."

Regarding Financial Supervisory Service Governor Lee Chanjin's criticism of leveraged single-stock products—saying they "should have been blocked at all costs" and "only make securities companies richer"—Chairman Hwang expressed partial agreement. He said, "Securities companies are essentially 'brokers' and act according to the market as licensed entities. So, saying they are 'getting fat' is a bit unfortunate. However, since the stock market is overheated, there are areas where securities companies need to self-regulate. From the Governor's position, it is understandable to raise such concerns, and as the association chairman, I agree with that part."

Additionally, Chairman Hwang argued for the need to adjust the current education tax burden on the securities industry, stating, "The situation is quite serious in many aspects." He continued, "When we ran a simulation two to three months ago, it seemed the education tax burden had increased by about five times, and I fear it could rise even further if this trend continues. Since the securities capital market also contributes through the securities transaction tax, I believe the education tax should be adjusted, and we are discussing this frequently with the Ministry of Economy and Finance."

Since 2009, securities companies have been subject to the education tax, which is similar to a value-added tax. However, there have been criticisms that losses are not accounted for, and the education tax is only levied on 'trading profits.' Securities companies can incur both trading profits and losses through liquidity provision trades as LPs, but under the current education tax law, only trading profits are included in the tax base, causing the overall tax burden to increase.

Chairman Hwang commented, "There is already the securities transaction tax on securities trading, and now the education tax is being imposed again. With stock prices rising recently and only trading profits being taxed, the overall tax burden is increasing significantly."

He also provided more details on plans to revitalize the exit market, stating, "The creation of secondary funds will be centered around comprehensive financial investment businesses, with roughly 15 securities companies and related organizations taking part. We plan to announce concrete measures by the end of this month and expect implementation to begin next month."

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