"Commercial Act Amendment Drives Korean Stock Market," Say Capital Market Experts at Field Meeting

Experts in the capital market have confirmed that the amendment to the Commercial Act, spearheaded by the Lee Jaemyung administration, has significantly improved investor sentiment among both domestic and foreign investors, thereby driving growth in the stock market. Some experts also predict that the recent easing of domestic and international uncertainties, such as the resolution of tariffs imposed by the United States, will be a positive factor. However, concerns remain about the potential decline in performance for certain domestic companies due to tariffs.

On the morning of August 7, the Financial Supervisory Service announced that it had held a 'Capital Market Field Experts Meeting' together with the Korea Financial Investment Association at the association's main conference hall in Yeouido. At this event, the agency gathered opinions and suggestions from ten experts in various fields, including representatives from Korea Investment & Securities, Shinhan Investment Corp., Mirae Asset Securities, JP Morgan, HSBC, and VIP Asset Management.

The experts in attendance first positively evaluated the partial easing of uncertainty resulting from the successful conclusion of tariff negotiations with the United States. Nevertheless, they expressed concerns that the potential decline in performance for some domestic companies due to tariffs, as well as increasing inflationary pressures in the United States, could impact the domestic market. They also pointed out that, since the outcome of the tariff negotiations was largely in line with market expectations, the short-term impact on stock prices would likely be limited, but the effects on earnings would vary by industry.

Regarding the amendment to the Commercial Act, the overall feedback was positive. In particular, the experts viewed the addition of minority shareholder rights protection to the duties of directors as the most favorable aspect. While there were concerns about potential short-term side effects such as increased volatility in management control, the consensus was that, in the long term, enhanced transparency in corporate governance would raise corporate value and have a positive impact on the stock market.

Various suggestions were also made to further vitalize the capital market. In the retail sector, there were calls for practical incentives, such as tax benefits for long-term holdings, to promote sound long-term investment. Experts emphasized the need to maintain stock market-friendly policies, including separate taxation of dividends and share buybacks, while also reviewing institutional improvements to boost stock investment?such as tax benefits for long-term investors and the introduction of a mandatory tender offer system to protect minority shareholders in cases of mergers or spin-offs.

Additionally, the meeting featured discussions on simplifying subscription procedures for public funds to encourage long-term investment, enhancing convenience for foreign investors, and the necessity and concerns surrounding Korea's inclusion in the MSCI Developed Markets Index.

Suh Jaewan, Deputy Governor of the Financial Supervisory Service, stated, "Recently, the KOSPI index has approached its highest level in history, signaling the end of a prolonged period of stagnation in our stock market. This marks a turning point, as funds previously concentrated in real estate are now moving into the capital market. Going forward, we will do our utmost to lay the foundation for the continuous growth of our capital market by listening to a wide range of expert opinions and maintaining communication with relevant institutions."

Suh Yuseok, Chairman of the Korea Financial Investment Association, said, "In order to revitalize the stock market, it is most important that the supply of capital expands into productive sectors such as innovative industries. The financial investment industry will make every effort to fulfill its crucial role as a provider of venture capital without any setbacks."