Yoon Visits Stock Market Opening Ceremony to Win Donghak Ants' Support

First Attendance Among Presidents Ever
Emphasizes Commitment to Eradicating Unfair Trading Including Full Ban on Short Selling Until June

The reason President Yoon Suk-yeol visited the Korea Exchange stock trading opening ceremony on the 2nd, becoming the first president in history to do so, is interpreted as an effort to win the votes of the 10 million Donghak ant investors ahead of the general election scheduled for April. The Yoon administration, which addressed investors' concerns last year through measures such as banning short selling and easing the criteria for capital gains tax on major shareholders, appears to be taking this step to reiterate its commitment to eradicating unfair trading.

[Image source=Yonhap News]

During his presidential campaign in 2022, President Yoon also attended the ‘Securities and Derivatives Market Opening Ceremony and Stock Market Festival’ held at the exchange as his first work of the new year. At that time, it was a surprise visit even to the Korea Exchange. This move by President Yoon was interpreted as a visit aimed at winning the votes of the majority of young and middle-aged investors, including the 2030 generation who were considered the casting vote in the presidential election and who have a high interest in the stock market.

With about 100 days left until the general election, President Yoon’s visit to the opening ceremony this year can also be seen in the same context of winning votes. After the COVID-19 pandemic, as liquidity increased in the market, a large number of retail investors such as white-collar workers, young people, and investors in the metropolitan area entered the stock market. Also, since the Yoon administration prioritizes ‘fairness’ and ‘rule of law,’ this visit can be read as an expression of the will to eradicate unfair practices in the stock market.

An official from the Korea Exchange said, "President Yoon’s visit to the stock trading opening ceremony can be seen as a sign of his focus on eradicating unfair trading."

The ban on short selling is also interpreted as a result reflecting public sentiment. In November last year, financial authorities announced a complete ban on short selling until June this year. This was a time when stock market volatility was increasing due to interest rate differentials with the United States, and investors’ anger peaked as allegations of illegal naked short selling by foreign and institutional investors were confirmed.

The government also revised the capital gains tax on major shareholders, which was criticized for causing big players to avoid the domestic stock market. At the end of December last year, the government announced a draft amendment to the Enforcement Decree of the Income Tax Act to raise the threshold for major shareholders subject to capital gains tax from the current 1 billion KRW to 5 billion KRW per stock.

Individual investors have long argued that easing capital gains tax is necessary to prevent major shareholders and big players from leaving the stock market, and this measure appears to reflect such public sentiment. Raising the major shareholder threshold can reduce market volatility caused by stock sales. The ruling party cannot help but pay attention to the stock index, an economic indicator, to gain an advantageous position in the election.