Half of Koreans Prefer "U.S. Market" Over "Korean Market"
U.S. Companies Praised for Innovation, Profitability, and Active Shareholder Returns
Korea Needs to Increase Shareholder Incentives Rather Than Governance Regulations
As public interest in stock investment grows nationwide, a survey revealed that 55% of domestic investors prefer the U.S. capital market.
On the 23rd, the Korea Chamber of Commerce and Industry (KCCI) announced the results of a "Public Perception Survey on the Korea-U.S. Capital Markets" conducted on the 17th and 18th via its own online platform 'Sofple,' targeting 1,505 citizens. According to the results, 54.5% of respondents preferred the U.S. capital market over the Korean market. Those who answered that their investment preferences were similar for both markets accounted for 22.4%, while only 23.1% favored the domestic capital market.
The most cited reason for investing in the U.S. capital market was "corporate innovation and profitability," at 27.2%. This was followed by ▲active shareholder returns (21.3%) ▲domestic stock market stagnation (17.5%) ▲U.S. economic boom (15.4%) ▲transparent corporate governance (14.8%) ▲investor-friendly tax and policy support (3.8%).
The preference of domestic investors for the U.S. stock market is expected to continue. Among respondents, 79.0% expressed an intention to increase their investments in the U.S. capital market in the future. Maintaining the current level was 15.3%, and those intending to reduce investments accounted for 5.7%. Conversely, 54.3% of respondents said they intended to increase investments in the domestic capital market, with 26.6% planning to maintain current levels and 19.1% intending to reduce investments.
The main reason cited for the sluggish domestic capital market was "stagnation in innovation among domestic companies," at 34.6%. This was followed by ▲regulation-centered corporate and financial policies (23.6%) ▲short-term investment culture (17.5%) ▲insufficient governance and shareholder returns (15.4%) ▲lack of tax and other support for financial investment (6.8%). Regarding measures to enhance the value of the domestic capital market, respondents emphasized the importance of expanding tax incentives such as introducing tax benefits for long-term stock holdings (26.0%) and reducing dividend income tax (21.8%).
In the U.S., capital gains tax is reduced for stock holdings exceeding one year, whereas South Korea offers no tax benefits based on holding periods. Additionally, in South Korea, if dividend and interest income combined exceed 20 million KRW, they are aggregated with other income such as earned income and taxed progressively at a top rate of 49.5% (national and local taxes combined). In contrast, the U.S. applies separate taxation at rates ranging from 0% to 20% based on federal tax standards.
Kang Seok-gu, head of the KCCI Research Department, stated, "Enhancing capital market value should not involve introducing new regulations but rather promoting innovative growth of companies and increasing incentives for investors who invest in such innovative companies." He added, "We hope the National Assembly will discuss amendments to the Capital Market Act that focus on pinpoint improvements for problematic issues rather than revising the Commercial Act for governance regulations."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
