Lee Jae-myung, the candidate for the Democratic Party of Korea in the presidential primary, emphasized the need to filter out listed companies with a price-to-book ratio (PBR) of only around 0.1 to 0.2 to stimulate the domestic stock market. He also said he would quickly push for the reintroduction of the Commercial Act amendment that was rejected in the National Assembly on 17th.
Regarding the dividend income tax, which is induced to be passively decided, he expressed understanding for calls for reform but noted that a simulation is necessary to see if it is possible to increase dividend payout ratios enough to offset reduced tax revenue.
On the 21st, the candidate discussed measures to stimulate the stock market with Seo Yu-seok, Chairperson of the Korea Financial Investment Association, and research center heads from 17 securities firms at the 'Policy meeting for capital market revitalization' held in Yeouido, Seoul.
The candidate said about the Commercial Act amendment that was rejected on 17th, "We failed to amend the Commercial Act this time, but we will do it as soon as possible." He noted, "I believe the rejection of the amendment is a resistance from a selfish minority, and it is something that should naturally be changed," emphasizing that "the amendment will lead to reduced abuses by controlling shareholders, decreased nonsensical decision-making, and thus a more rational system that can reduce uncertainty in predictions."
Key figures attending the meeting pointed out that compared to the recent growth rate of domestic corporations, the growth of the stock market is lagging behind, indicating that support at the government level is needed.
Seo Yu-seok, Chairperson of the Korea Financial Investment Association, said, "The stock market is the flower of capitalism, and as of the end of last year, the Korean stock market ranked 15th in the world by market capitalization and 6th in the number of listed companies," but he noted, "However, it remains significantly undervalued compared to major countries and has been fluctuating within a range for several years."
Chairperson Seo mentioned that a control tower is necessary to solve the Korea discount issue (undervaluation of the domestic stock market) through improvements in corporate governance, shareholder returns, and tax benefits. He suggested, "Making the resolution of the Korea discount a key national agenda, establishing a special committee or organization at the government level led directly by the president as the chairperson would be a good measure."
In response, the candidate pointed out that there are too many listings compared to market capitalization. He said, "Shouldn't we quickly liquidate those companies with low PBR?" and added, "There are too many stocks that have little value."
The candidate stated, "It is a big problem that there are companies with PBR under 1, and the overall PBR has also fallen below 0.8," and noted, "If we double this, the KOSPI 5000 could be possible." He emphasized the need for long-term value-up policies.
The candidate showed some acceptance of the opinion that the fact that major shareholders, who are also CEOs, are passive in dividend decision-making due to excessive taxes indicates a need to consider revising the dividend income tax. He stated, "I empathize with the issue of dividend income tax" and noted, "We need to contemplate whether it is genuinely positive to increase dividends enough to offset any decline in tax revenue, possibly through simulations."