Kwon Daeyoung: "KOSPI 5000 Is Certainly Possible... 'Debt-Fueled Investments' Are Also a Form of Leverage"

On November 4, Kwon Daeyoung, Vice Chairman of the Financial Services Commission, stated that achieving the KOSPI 5000 is "certainly possible." Addressing concerns that the recent KOSPI rally has led even young people to so-called "debt-fueled investing," he dismissed the worries by saying, "People have viewed it too negatively, but it is a form of leverage," while also emphasizing, "Investment at an appropriate level is necessary."

Appearing on CBS's Kim Hyun-jung's News Show on this day, Vice Chairman Kwon explained that the recent surge in the KOSPI index, which surpassed the 4,200 mark and continues to set new records, is due to "the government's efforts to vitalize and advance the stock market being recognized both domestically and internationally."

First, he said, "The most fundamental goal is to make the market fairer and more transparent," adding, "Efforts to guarantee shareholder value, such as amending the Commercial Act, have consistently received support both domestically and internationally." He continued, "More importantly, we have entered a favorable phase where corporate performance is improving, and much of the uncertainty has been resolved through the Asia-Pacific Economic Cooperation (APEC) summit, which has been comprehensively reflected in the market. However, we must also consider the aspect of a liquidity-driven market."

Regarding the possibility of achieving the so-called "KOSPI 5000," he said, "It is not appropriate for a government official to comment on the index," but expressed confidence, saying, "It is certainly possible." He added, "After reaching 2,000 and then 3,000, and then coming back down, there is both excitement and some fear as we tread uncharted territory," but emphasized, "The Korean stock index will continue to rise strongly."

From the beginning of the interview, Vice Chairman Kwon also highlighted the activities of the Joint Response Team to Eradicate Stock Price Manipulation, which is composed of the Financial Services Commission, the Financial Supervisory Service, and the Korea Exchange. Since its establishment, the joint team has announced back-to-back cases: the first involving super-rich individuals and financial experts colluding to manipulate stock prices on a scale of 100 billion won, and the second involving a senior executive at NH Investment & Securities profiting illicitly from undisclosed information.

He stated, "To eradicate stock price manipulation, which is a chronic problem in our market, the Joint Response Team was launched on July 30 by order of the President," adding, "Although it is a temporary organization, there is no time limit for punishing stock price manipulation. The organization will continue to operate and seek systematic methods until stock price manipulation disappears." He continued, "Fines can be imposed at four to six times the amount of illicit gains. Accounts can be frozen, and since court rulings can take a long time, punitive administrative fines can also be imposed." He reiterated his determination to root out stock manipulators, saying, "More importantly, these individuals will be expelled from the stock market."

When asked if he is concerned about the recent increase in "debt-fueled investing" among young people, Vice Chairman Kwon replied, "People have viewed it too negatively, but it is a form of leverage." However, he added, "It is necessary to manage a portfolio at an appropriate level and invest within the limits of risk tolerance."

He said, "When comparing the investment returns of real estate, deposits, and the ten stocks with the highest market capitalization over the past ten years, the stock market performed much better," adding, "It is better to make long-term investments in value stocks that provide stable dividend income, and the government must also make institutional efforts to support this."