Lee Eogwon: "Long-Term Capital, Not Speculative Investing, Should Support the Stock Market... Expanding the Demand Base"

On September 18, Financial Services Commission Vice Chairman Lee Eogwon stated, "The market should be supported not by short-term trading and speculative investing with borrowed money, but by long-term funds linked to the formation of public assets," and added, "We will expand the long-term demand base for the domestic stock market."

At a congratulatory address delivered at the 29th anniversary conference of the Korea Capital Market Institute in Yeouido, Seoul on the morning of the same day, Vice Chairman Lee emphasized, "We will promote long-term investment as a rational choice through the launch of products such as the Youth Independence Fund and the Productive Finance Individual Savings Account (ISA)." He further noted, "We will also work with relevant ministries to refine financial tax policies so that greater rewards accrue for longer-term holdings."

He added, "We will create an environment in which long-term institutional funds, such as from pension funds and policy-related capital, can flow into the market," and explained, "By establishing Korea Strategic Technology Partners (KSTP), a specialized management company for ultra-long-term, large-scale investment in future strategic technologies, we will ensure the provision of funding to core source technology sectors."

Against a backdrop of rising global oil prices and higher benchmark interest rates, which have increased market uncertainty, the Vice Chairman also confirmed plans to enhance mechanisms for mitigating volatility during emergency situations.

He said, "We will rigorously manage market leverage, such as margin trading, and, during emergencies, further fine-tune volatility mitigation tools, including the introduction of market stabilization and emergency action authorities for the Financial Services Commission." He continued, "By accelerating improvements to the capital market structure, we will both enhance market dynamism and strengthen market stability, such as addressing accumulated uncertainties."

The conference was organized to seek solutions regarding the role the capital market should play in promoting a transition toward a productive financial system—specifically, strategies to enhance the resource allocation function of the stock market, the importance of intangible assets, the need to foster a healthy venture capital ecosystem, and proposals to improve the tax system.

At the conference, Senior Research Fellow Lee Hyoseop of the Korea Capital Market Institute and Hong Byungjin, Head of Customs Research at the Korea Institute of Public Finance, presented "Financial Tax Reform Measures for Productive Finance." They argued that in order to shift household portfolios from real estate to financial investment products, it is necessary to address tax disparities between real estate and financial investment products, between domestic and overseas financial investment products, and among various domestic products.

According to an analysis of households’ post-tax asset returns that takes into account various taxes and opportunity costs, the return on Seoul real estate was the highest. It was also found that wealthier individuals show a marked preference for overseas stocks, while domestic stocks are perceived as less attractive for long-term holding compared to overseas stocks.

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