77% of Individual Investors Say "Expansion of Domestic Capital Market Needed"... Prefer Strengthening Investment Incentives

KCCI Surveys Public Opinion on Promoting Capital Market Investment
1,710 Respond via Online Platform 'SOPLE'
77% Say "Domestic Capital Market Should Be Expanded"
88% Say "Need to Address Concentration in Real Estate and Overseas Assets"
45% Choose "Expanding Investment Incentives" as Preferred Method

Eight out of ten individual investors in South Korea agree on the need to expand the capital market, and they prefer investment incentives and diversification of investment products over regulatory measures as ways to achieve this.

The Korea Chamber of Commerce and Industry (KCCI) announced on the 30th that, according to a survey of 1,710 investors conducted through its online platform 'SOPLE', 77% of respondents said they "agree on the need to expand the domestic capital market." In contrast, 23% said they did not agree.

When asked about the top priorities for expanding the capital market, "expanding investment incentives" was chosen by 45.1% of respondents, making it the most popular option. This was followed by "expanding investment products and improving returns" (24.7%), and "improving corporate regulations" (19.5%). Only 10.2% selected "strengthening governance regulations."

Regarding this, the KCCI stated, "It is important to expedite the legislation of investment incentive bills pending in the National Assembly, such as the separation of dividend tax and support for value-up companies." They further suggested, "Currently, if annual financial income (dividends + interest income) exceeds 20 million won, it is subject to progressive comprehensive taxation, combined with earned income, at rates up to 49.5%. If it is 20 million won or less, it is taxed separately at 15.4%. There should be consideration of separating taxation regardless of the amount and lowering the tax rate."

The KCCI also emphasized, "It is necessary to proactively consider introducing tax incentives for long-term stock holdings, drawing on foreign legislative examples where benefits such as lower tax rates are granted for longer holding periods, to encourage long-term investment."

An overwhelming majority of respondents (88.3%) pointed out that the concentration of domestic investment in real estate and overseas assets is a significant issue that needs to be addressed. This suggests that the activation of the capital market is being recognized as a public matter, such as supporting corporate innovation and preventing capital outflow.

A significant portion of respondents also showed strong interest in new corporate finance investment products or systems that have been recently introduced or are under discussion. Notably, 74.3% expressed willingness to invest when the first Integrated Managed Account (IMA)?a product in which securities firms raise and manage client funds and distribute both principal and investment returns?is launched next year. Additionally, 66.4% said they are willing to invest in Business Development Companies (BDC), which are public, listed investment vehicles that invest at least 40% of their assets in venture companies. The KCCI noted, "Both BDCs and IMAs are subject to mandatory allocations to venture capital, which can help companies secure funding. In particular, IMAs are designed to allocate at least 70% of total managed funds to corporate finance, making them a practical funding channel for companies facing liquidity crises."

In relation to the increased economic uncertainty caused by recent global tariff issues, 70% of individual investors responded that they have already established customized investment plans. Notably, domestic individual investors remain highly motivated to invest not only in safe assets such as deposits and savings but also in stocks. 32.4% of respondents said they plan to increase their stock investments this year, followed by deposits and savings (15.3%), gold (8.5%), bonds (5.1%), real estate (3.4%), virtual assets (2.7%), and US dollars (2.6%).

Kang Seokgu, head of the KCCI's Research Division, stated, "As corporate cash flow challenges intensify, it is time to ensure that individual investment demand translates into actual investment, thereby meeting companies' funding needs and restoring economic dynamism." He emphasized, "It is necessary to broaden perspectives beyond corporate governance and regulations, comprehensively review companies, investors, incentives, and regulations, and rapidly introduce diverse financial products to expand investment opportunities."