As the KOSPI index captured the 6,000-point peak at an unprecedented pace, concerns are mounting over an overheated stock market. With the rally's magnitude and speed surpassing market expectations, the likelihood of a short-term correction is gaining traction.
To resolve the Korea discount, strong institutional reforms have been pushed forward. Following the passage of the first and second Commercial Act amendment bills in the National Assembly last year, the third Commercial Act amendment bill, centered on mandating the retirement of treasury shares, also cleared the National Assembly's plenary session the day before.
As government-led institutional supplements followed one after another, corporations also began responding proactively with shareholder-return policies such as increasing dividends and retiring treasury shares. Thanks to stock market stimulus measures, a clear MoneyMove phenomenon has emerged, with idle funds flowing into the stock market. However, as the tilt toward large-cap stocks has deepened, many experts diagnose the market as being in a short-term overheated state.
On the 26th, when ChosunBiz asked the heads of research at 11 major domestic securities firms what tasks are needed for the KOSPI to trace an upward-right slope like the U.S. stock market, the chiefs agreed that, using the government's stimulus as a primer, the essential growth of corporations and full-fledged support to back it up are indispensable.
The research chiefs agreed that government policy has laid a solid foundation for the growth of the capital market.
Lee Jin-woo, head of research at Meritz Securities, said, "The chronic issues behind the Korea discount are governance, the annually increasing number of shares in circulation, and the prevalence of cyclical industries," adding, "Given that, we judge that amendments to the Commercial Act, the strengthening of corporations' shareholder-friendly policies, the retirement of treasury shares, and the growth of the artificial intelligence (AI) industry have resolved the Korea discount."
The research chiefs agreed that the essential growth of corporations is more important than anything going forward. In particular, because the domestic industrial base is skewed toward a business-cycle (cyclical) structure, the view is that overall corporate earnings must improve to build firm trust in the market.
Lee Jong-hyung, head of research at Kiwoom Securities, said, "Korea is centered on cyclical industries," and "We can expect sustained growth in sales and profits only if the number of corporations with global competitiveness increases."
Jo Soo-hong, head of research at NH Investment & Securities, said, "For the KOSPI to rise structurally, belief must build that Korean stocks can deliver steady returns. With trust, long-term funds flow in and volatility declines, which in turn creates a virtuous cycle that lifts the multiple."
The research chiefs stressed that the government should step in with policy support to drive corporate growth.
Hwang Seung-taek, head of research at Hana Securities, said, "What's most important is supporting an environment where corporations can conduct business smoothly," adding, "Corporate profits need to increase for the stock market to rise, creating a virtuous cycle."
Kim Dong-won, head of research at KB Securities, also said, "Full-fledged support is needed for strategic sectors such as semiconductors, shipbuilding, space and aviation, and defense," adding, "Policy support should serve as a safety net against uncertainties such as subsidies, policy backing, and tariff threats."
Yoon Chang-yong, head of research at Shinhan Investment & Securities, said of the government's Public Growth Fund under way, "Through the Public Growth Fund, corporations and the government need to enhance technological competitiveness," adding, "Regulatory easing by the government is necessary, and using capital to build industries, technologies, and corporations with global competitiveness is a key task."