Last week, the average transaction value in the Korean securities market plummeted compared to the previous week. Following the government's announcement of tax reform plans, policy uncertainty has emerged, and investors are displaying a wait-and-see attitude.
According to the Korea Exchange, from 4th to 8th, the average transaction value in the Korean securities market was recorded at 15.55608 trillion won. This figure represents a 19.6% decrease from the previous week's average transaction value of 19.3671 trillion won (July 28 to August 1).
The decline in transaction value last week appears to be influenced by the frozen investment sentiment, which has not yet recovered following the announcement of the government's tax reform plan. On the 31st of last month, the government announced the tax reform plan, strengthening the major shareholder threshold from 5 billion won to 1 billion won. The maximum tax rate for separately taxing dividend income was also set at 35%, which is 10% higher than the 25% proposed in the income tax law amendment by Lee So-young, a member of the Democratic Party of Korea.
As the tax reform plan failed to meet expectations, funds quickly left the capital market. The KOSPI index plummeted by 3.88% on the day after the announcement of the tax reform plan on the 1st.
After the announcement of the tax reform plan caused investment sentiment to freeze rapidly, the Democratic Party of Korea began soothing investors by suggesting the possibility of reconsideration. On the 1st, Kim Byeong-ki, the floor leader of the Democratic Party of Korea, said, "We will look into the possibility of raising the major shareholder threshold of 1 billion won, focusing on the special committee on the KOSPI 5000 and the tax normalization committee within the party."
However, the presidential office holds the position that it is difficult to change policy due to short-term stock price declines. Presidential office spokesperson Kang Yu-jeong said on the 5th, "It is difficult to review policies based solely on short-term stock price fluctuations when changing the structure of the stock market."
With the uncertainty surrounding the tax reform plan highlighted and the tariff phase intensifying, investors are in a wait-and-see mood regarding the market.
Han Ji-young, a researcher at Kiwoom Securities, noted, "For the long term, tariff-related noise will likely remain in the stock market until the end of August," adding, "It is necessary to keep in mind that this tariff noise may lead to temporary increases in stock price volatility."