"Leave It Invested for 30 Years and It Becomes 200 Million Won?"... A Bold 'Stock Market Stabilization' Proposal Amid Volatile KOSPI Trading

Proposal to Redirect Tax Revenue from the Semiconductor Boom into Long-Term Stock Investments
Beneficial Interests Allocated to Newborns... Withdrawals Allowed from Age 30
Assumption of 275.8 Trillion Won... Market Distortions and Equity Remain Challenges

As domestic stock market volatility has intensified amid sustained net selling by foreign investors, Bae Jaegyu, CEO of Korea Investment Management, known as the "father of ETFs," has drawn attention with an unconventional proposal for a public fund. He suggests using excess tax revenue generated by the semiconductor industry's boom to make long-term investments in domestic stocks and allocate the resulting assets to future generations. Rather than relying on a stock market stabilization fund that offers only a short-term fix, the idea is for the government to steadily buy stocks in proportion to their market capitalization, creating a safety net for the market while helping young people achieve financial independence. The proposal's centerpiece is to allocate each newborn a beneficial interest in stocks worth 50 million won at acquisition cost, with withdrawals permitted from age 30.

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Concerns Over Lack of Long-Term Buyers Amid Foreign Selling

On November 11, Bae shared a policy idea on his social media account that combines discussions about the government's Future Growth Fund with a role in stabilizing the stock market. "As volatility in the stock market has become so severe, people are asking whether we should at least establish a stock market stabilization fund," he said, adding that he had developed a proposal that could achieve both objectives.

The proposal comes against a backdrop of supply-demand imbalances in the domestic stock market. Foreign investors had been net sellers of domestic stocks for seven consecutive months through October, and also sold more than 10 trillion won worth of stocks on the Korea Exchange's main board from November 2 to 6. On November 5 alone, net selling totaled approximately 3.4 trillion won, and the KOSPI plunged more than 5%.

With the buying capacity of institutional investors, including pension funds, also limited, some say there are not enough buyers to absorb foreign investors' selling over an extended period. The proposal appears to reflect the view that short-term measures to address supply and demand alone cannot sufficiently reduce market volatility, and that a sustainable base of buyers must be established.

Assumption of 275.8 Trillion Won in Excess Tax Revenue from Semiconductor Boom... Proposal for Long-Term, Diversified Investment in Domestic and Overseas Stocks

Bae's proposal is to invest tax revenue collected in excess of expectations, partly due to the semiconductor industry's boom, in the domestic stock market over an extended period rather than use it for one-off government spending. Under the proposal, the government would buy stocks listed on the Korea Exchange's main board and the KOSDAQ in proportion to their market capitalization. This would limit the concentration of funds in particular stocks or industries while providing sustained, long-term demand across the market. He also proposed investing overseas, including through indexes such as those compiled by Morgan Stanley Capital International (MSCI), in addition to investing in domestic stocks.

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The proposal also specifies the potential scale of funding. According to Korea Investment Management, it assumes a total of 275.8 trillion won in funds raised over three years, from 2026 through 2028. This figure comprises 56.2 trillion won in excess tax revenue over the 2026 budget forecast, 162.3 trillion won in additional revenue based on the long-term trend in tax revenue growth in 2027, and 57.3 trillion won in 2028.

However, these figures do not represent tax revenue that has actually been collected or funds whose use has been legally approved. They are estimates set out to explain the policy proposal. The proposed investment structure involves buying domestic listed common stocks in proportion to their free-float market capitalization and deploying the funds raised each year in equal amounts over the trading days of the following year. It also proposes managing funds that have not yet been invested in short-term safe assets.

Allocate Stock Beneficial Interests Worth 50 Million Won to Each Newborn... Projected to Reach Up to 380.61 Million Won After 30 Years

The proposal's core is to allocate the stock assets accumulated in this way to future generations. Children aged 0 to 19 as of the end of 2026 would receive different amounts based on their age, while each child born from 2027 onward would be allocated a beneficial interest in stocks worth 50 million won at acquisition cost. The proposal estimates that approximately 111.67 trillion won would be needed for existing children and about 127.17 trillion won for newborns born over the 10 years from 2027 through 2036.

Beneficiaries would be allowed to withdraw some or all of their assets from age 30. Assuming dividends are reinvested and an average annual total return of 5% is maintained for 30 years, Bae calculated that an investment of 50 million won could grow to approximately 216.1 million won. He estimated that it could reach about 121.36 million won at an average annual return of 3%, or about 380.61 million won at 7%. Since the final asset value would vary considerably depending on the rate of return, these figures are not guaranteed amounts but projections based on assumed long-term investment performance.

Bae said the proposal aims to stabilize the stock market while helping future generations build assets. "The goal is to create a virtuous cycle in which the government's temporary excess tax revenue strengthens the foundation for long-term investment in the stock market, and the fruits of corporate growth return to future generations as assets," he said. The proposal is also intended to support financial education alongside long-term asset accumulation.

Public Funds' Market Intervention... Independence and Equity Remain to Be Examined

However, significant challenges must be addressed before the proposal can be institutionalized, given that it involves the government mobilizing large-scale funds to buy stocks. Concerns have been raised that sustained purchases by public funds could distort market prices or concentrate voting rights in the hands of a particular entity. Who would be held responsible for investment losses in the event of a market downturn is also a key issue.

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Intergenerational equity based on the beneficiaries and timing of allocation must also be considered. Key aspects of the system's design include determining the allocation criteria for newborns born at particular times and existing children, and securing a stable source of funds for long-term management. Legal and tax reforms, as well as safeguards for the independence of fund management, are also prerequisites.

Bae also made clear that this proposal is not a fully developed policy implementation plan. "This is not an implementation plan prepared by policy experts after thorough review," he said, adding that the funding, legal and tax frameworks, and independence of fund management would need to be examined during the actual process of institutionalization. He stressed that the proposal was not intended to create business opportunities for the asset management industry, but said its significance lay in contributing to asset building for future generations.

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