[K-INVESTORS] "Defending KOSPI 5000 Will Be Difficult... Inflow of Long-Term Foreign Capital Is Essential"

Interview with Park Jonghak, CEO of Bearing Asset Management
AI Is the Biggest Variable for Both Global and Korean Markets
AI-Driven Rally Likely to Continue for Some Time
Monetary Policy of Major Countries and Korean Capital Market Policies Are

"The most important factor for both global and Korean stock markets is artificial intelligence (AI). While there will be volatility over whether or not we are in a bubble, given the fierce investment by companies and the intense competition for supremacy among major countries, I believe the stock market still has room to rise."

Park Jonghak, CEO of Bearing Asset Management, highlighted the following as the key variables that will shape the Korean stock market this year during an interview at the company's headquarters in Euljiro, Jung-gu, Seoul, on the afternoon of the 13th: ▲ the AI cycle, ▲ monetary policy in major countries such as the United States, and ▲ capital market advancement policies, including the separate taxation of dividend income.

He diagnosed that, as the Korean stock market is simultaneously influenced by the AI cycle-which has emerged as the biggest variable in the global financial market-and US monetary policy, structural support from domestic capital market systems is essential for the KOSPI to surpass the 5,000 mark and enter a sustained upward phase. Bearing Asset Management Korea Corporation, established in 1988, currently manages approximately 25.5 trillion won in assets under management (including 17 trillion won in domestic equities), and Park has been leading the company since 2020.

Park Jonghak, CEO of Bearing Asset Management, is being interviewed by The Asia Business Daily at the company's headquarters in Jung-gu, Seoul on the 13th. Bearing Asset Management Korea Corporation

"AI Investment Competition Will Continue"... Three Variables to Shape the Korean Stock Market

First, CEO Park described the current investment fervor surrounding the AI industry as a phase of structural competition. He stated, "The AI industry continues to evolve," and predicted, "The cycle will only turn once the winners in this competition become clear." Despite the ongoing debate over an AI bubble, he explained that the AI-driven stock market rally is likely to continue for quite some time, as investment competition among global companies and the battle for AI supremacy among nations intensify. Park said, "There will continue to be debates over whether we are in a bubble or not, but until the survivors become more apparent and excessive investment centered on big tech subsides, companies will have to keep competing in infrastructure investment. This will not end in the short term."

The second variable he pointed to was monetary policy, particularly that of the United States. Park said, "Overall, the economy looks reasonably healthy," but also cautioned, "So far, companies are absorbing the burden of US-imposed tariffs, but eventually, these costs could be passed on to consumers. If that happens, inflationary pressures will intensify." The direction of US monetary policy will inevitably have a direct impact on the global financial market as well as the Korean stock market. Regarding recent moves by the Donald Trump administration to impose sanctions on Venezuela, Park noted, "This can be seen as an effort to manage oil prices ahead of the midterm elections," and pointed out, "There is a sense in which the inflationary pressure from tariffs is currently being masked."

For the Korean stock market, capital market advancement policies are expected to serve as the third variable. Park emphasized, "Following the amendment of the Commercial Act to improve corporate governance, follow-up measures are underway," and added, "In particular, share buybacks and cancellations, as well as the separate taxation of dividend income, are important."

However, he expressed concern that, following the amendment of the Commercial Act, foreign investors' purchases have been limited to only Samsung Electronics and SK Hynix. Park pointed out, "Domestic and foreign investors' perspectives on capital market advancement policies still remain at a 'thematic' approach," and said, "If corporate governance reform becomes more widespread, holding companies, banks, and securities stocks could be structurally revalued, but for now, they are still regarded as trading themes that see a brief rise and are then sold off." He added, "Foreign investors will only return in earnest once there is trust that board decisions are made efficiently and that surplus profits are returned to shareholders as a matter of culture."

On Achieving KOSPI 5000: "Sustainability Is More Important"-Criticizing Stock Concentration

Park took a cautious stance regarding the "KOSPI 5000" era pledged by the Lee Jaemyung administration. He stated, "There is enough momentum in the cycle to reach the 5,000 mark," but stressed, "What is more important is sustainability above 5,000." He pointed out that the current rally is concentrated in a small number of stocks such as Samsung Electronics and SK Hynix, and that there is insufficient inflow of new foreign capital.

He warned, "The dependence on these two stocks is excessively high, so if you look only at the index, there could be an 'optical illusion.' Rather than seeing new capital inflows, the market is currently moving within the existing pool of funds. If the AI cycle slows even slightly, funds could shift elsewhere." He continued, "For the KOSPI to rise stably above the 5,000 mark through qualitative growth, improvements in corporate earnings outside of AI and genuine capital market advancement must function properly."

In particular, the inflow of long-term foreign capital is essential in this process. Park expressed hope that if Korea is included in the World Government Bond Index (WGBI) in April and is also listed as a candidate for inclusion in the Morgan Stanley Capital International (MSCI) Developed Markets Index, overseas investors' perceptions could change. He said, "If Korea is included as a candidate country this June and is actually included two years later, the Korean stock market could take a step forward," and added, "As long as the conditions are met, there is ample room for foreign capital to flow back in."

Park also mentioned that, in the process of promoting capital market advancement-such as the separate taxation of dividend income-measures such as revitalizing active funds are needed to maximize policy effectiveness. He said, "If funds are excluded from the system, the impact of the policy will inevitably weaken," and added, "To maximize policy effectiveness, the sales process should be streamlined and funds should also be included in the scope of separate taxation on dividend income." He further stressed, "Institutional support is needed to enable funds to move from a real estate-centered investment paradigm to growth assets that consider AI and ESG (environmental, social, and governance) factors. The Korean market must become one in which foreign pension funds can confidently entrust their capital."