"The vice minister of economy isn't even interested in the stock market, so is a KOSPI of 5000 achievable?" (Stock online community)
As the domestic stock market plunged, Vice Minister of Economy and Finance Koo Yun-cheol's comments came under scrutiny. Responding that the price-to-book ratio (PBR, market capitalization ÷ net worth) of the KOSPI index is around 10 times, he faced criticism among individual investors as evidence of his disinterest in the stock market.
According to the financial investment industry on the 20th, Vice Minister Koo attended a report at the Strategy and Finance Committee at the National Assembly the previous day. When Democratic Party of Korea lawmaker Lee So-young asked him how much the PBR of the KOSPI index was, he answered, "Isn't it around 10?"
In response, lawmaker Lee explained, "It's 1.0," adding that "Taiwan is at 2.4, Japan is at 1.6, Brazil and Thailand are at 1.6 and 1.7 respectively, and the average for emerging countries is 1.8."
The PBR based on the closing price of the KOSPI index the previous day is 1.06 times. For Vice Minister Koo's projected 10 times to be accurate, the KOSPI index would need to approach 30,000. Individual investors criticized him on online communities and stock-related YouTube channels, saying, "The vice minister doesn't even know the PBR, which is a key indicator of the stock market."
Vice Minister Koo's other responses also became a source of dissatisfaction. On the same day, lawmaker Lee stated, "There is significant public expectation that the KOSPI will normalize due to government policy, yet government efforts have vanished since July," and added, "I will gradually explain how poorly crafted the tax reform proposals, such as the dividend income tax, are."
Regarding this, Vice Minister Koo noted, "I have a sense of responsibility that we shouldn't make citizens jump into the stock market by lowering the security transaction tax while corporations, as players in the capital market, lack competitiveness and then have them think, 'I should have just left it in real estate.'"
Although the intention was to strengthen support for corporations rather than tax benefits, individual investors who had hoped for the government's capital market policy, characterized by the 'KOSPI 5000 era,' expressed disappointment. A comment on a short video covering the related remarks stated, "They might as well suggest investing in real estate for the time being."
Individual investors pointed out that Vice Minister Koo's identification of the inter-Korean relationship as a cause of the 'Korea Discount' was an indication that he does not understand reality.
Lawmaker Lee also remarked, "The inter-Korean relationship being a factor for the undervaluation is an old story," and emphasized that "Taiwan, with more unstable security compared to us, has a much more active capital market." He added, "The real discount factor for our stock market is that the government does not provide consistent policy signals and does not pursue them vigorously."
As of 11:25 a.m. on the day, the KOSPI and KOSDAQ indices showed a decline of around 2%.