Investor Briefing Held in Hong Kong
Commitment to Advancing Capital Market Policy Initiatives
Lee Bok-hyun, Governor of the Financial Supervisory Service (FSS), who met with representatives of global investment banks (IBs), stated, "Despite two impeachment crises, Korea restored stability by upholding the constitution and democratic procedures," and added, "We plan to consistently and continuously pursue the major capital market policy tasks that have been promoted so far."
According to the FSS on the 15th, Governor Lee, whose term expires in June, held a briefing on capital market issues the previous day at the JW Marriott Hotel in Hong Kong, attended by 12 global IBs including Goldman Sachs and Morgan Stanley, as well as representatives from the Asia Securities Industry & Financial Markets Association (ASIFMA) and the Pan-Asian Securities Lending Association (PASLA).
At the event, Governor Lee emphasized that despite recent challenges such as impeachment and U.S.-originated tariff shocks, the Korean economy has demonstrated crisis resilience based on solid industrial competitiveness, and he pledged to consistently and sustainably advance key capital market policy tasks.
First, he said, "Even amid increased stock market volatility due to external risks, we resumed short selling on March 31 based on confidence in the resilience of the Korean economy," adding, "This reflects the Korean financial authorities' determination to enhance market predictability and investor confidence." He continued, "I understand that some foreign investors have concerns about strengthened sanctions and penalties related to illegal short selling," and confirmed that the FSS's related investigative duties will be conducted reasonably.
Governor Lee also emphasized, "We will take a more proactive stance in enhancing corporate value and protecting shareholders' rights." Previously, he had even stated he would stake his position just before the government's veto of the Commercial Act amendment. He viewed the recent controversies surrounding the legal amendments positively as signs of change aimed at strengthening shareholder rights protection. Governor Lee expressed that the financial authorities are firmly committed to the direction of enhancing shareholder protection and said, "After social consensus on specific methodologies, visible progress is expected soon."
Additionally, he reaffirmed plans to improve foreign investors' accessibility to the Korean capital market, including preparing policies to allow foreign asset management companies to sell funds through their domestic affiliates.
Participants from global IBs welcomed Korea's decision to resume short selling and expressed their intention to respect and comply with the new short selling regulatory framework. At the same time, they requested the FSS to operate regulations reasonably to avoid excessive sanctions for minor violations.
Some attendees also pointed out that improving corporate governance and protecting shareholder rights are essential to resolving the Korea discount. They emphasized the need for amendments to laws such as the Commercial Act and the Capital Markets Act and expressed concerns that the momentum for policy promotion by the Korean government should not decline due to recent failures in amending the Commercial Act.
An FSS official stated, "From the perspective of global investors, the Korean capital market still has shortcomings in areas such as shareholder rights protection and corporate governance improvement, so there were suggestions that policy efforts in these areas need to continue," and added, "We plan to actively communicate with global investors regarding various policies promoted by the government and financial supervisory authorities in the future."
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