Lee Administration's Shift Toward SME-Centered Economy
Rising Expectations for Broad Recovery in the Venture Investment Market
On October 22, Shinhan Investment Corp. emphasized in a report that "with the current administration's strategy to shift the economic structure toward small and medium-sized enterprises and the expansion of support for ventures and startups, it is time to refocus on investing in listed venture capital firms." The company analyzed that expectations for a recovery across the venture investment market are growing, as the government's policy of fostering growth finance is gaining momentum.
The government has designated "Opening the Era of the Third Venture Boom: Becoming One of the Four Global Venture Powerhouses" as a national agenda item, focusing on innovation in small and medium-sized enterprises and nurturing artificial intelligence (AI) startups. To this end, the government plans to: ▲ foster a venture investment market worth 40 trillion won annually ▲ pursue the "Next Unicorn Project" with the goal of nurturing 50 unicorns ▲ turn regional ventures and startups into growth engines ▲ and create a sustainable ecosystem. Additionally, the government's research and development (R&D) budget for 2026 is set at 35.3 trillion won (draft budget), up 19.3% from the previous year, marking the largest increase in the past decade.
Tax incentives have also been strengthened. The scope of tax credits for advanced industry R&D has been expanded, and higher deduction rates have been applied to small and medium-sized enterprises and advanced industry companies. Shinhan Investment Corp. stated, "Such financial support centered on small and medium-sized enterprises and the expansion of the R&D budget serve as a catalyst for startups invested in by venture capital funds to grow rapidly," adding that "this is positive for venture investment sentiment."
The current administration's policy to vitalize the capital market is also expected to have a positive impact on the stock prices of venture capital firms. The government and the ruling party are accelerating efforts to improve the structure of the capital market, aiming to resolve the 'Korea Discount' and usher in the 'KOSPI 5000 era.' Legislative amendments and support measures are being implemented, including expanding directors' fiduciary duties to shareholders, introducing a cumulative voting system, separating taxation on dividend income, and mandatory cancellation of treasury shares.
As of the previous day's closing price, the KOSPI's return for the year stood at 59.4%, the highest among major global markets. In this market environment, expectations for a recovery in the initial public offering (IPO) market are also rising. Shinhan Investment Corp. analyzed, "Unlisted companies such as K Bank and Musinsa are expected to resume their listing efforts," and "opportunities for venture capital firms to exit their investments will expand."
Following major policy announcements, the stock prices of venture capital firms have rebounded quickly, surpassing the KOSDAQ index. The report noted, "The stock price trend of venture capital firms is expected to continue its upward trajectory," and "given the current stock index, we also anticipate a revitalization of the IPO market."
Shinhan Investment Corp. advised, "Investing in listed venture capital firms provides an indirect way to invest in promising startup portfolios without directly investing in specific companies," adding, "It is important to pay attention to which venture capital firms have invested in major unlisted companies and when they expect to exit, in order to distinguish the best opportunities."
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