A claim has been made that easing tax imbalances between financial products and real estate is needed for Korea's capital market reform to keep delivering results. With household asset holdings excessively concentrated in real estate and deposits, the tax system should be adjusted so funds can shift to productive financial investment.
Analysts also said the recent rise in the KOSPI is hard to explain solely by global market strength or a semiconductor upcycle, and that expectations for capital market rule changes are largely reflected.
The Korea Capital Market Institute, the Seoul Institute for Socio-Economic Studies, and the Korean Association for Development Economics held a joint symposium on the theme of "Outcomes and prospects of capital market reform" at the Yeouido Financial Investment Center in Seoul on the 22nd to discuss the effects of recent capital market reforms and future tasks.
Park Chang-gyun, a senior research fellow at the Korea Capital Market Institute who presented that day, said, "The trajectory of the domestic stock market after 2025 is hard to explain only by global gains or the semiconductor cycle," adding, "In particular, the possibility of a structural break in the KOSPI has been observed around April last year, which can be seen as reflecting expectations for capital market rule changes."
Park cited inadequate shareholder-return policies, low profitability, and weak governance as reasons the Korean stock market has long suffered from the "Korea discount" (undervaluation of Korean stocks). He also assessed that although aging is advancing rapidly, the pension replacement rate and the level of financial assets accumulation are low, and household assets are skewed toward real estate and cash/deposits.
He emphasized, "Capital market reform is not a simple stock-boosting policy, but should be approached as structural reform to shift the household asset structure toward financial investment and to expand corporations' funding base."
He particularly pointed to tax differences between financial products and real estate as one cause of distorted capital flows. While domestic household assets are concentrated in real estate, financial investment products face relatively heavier tax burdens and lack investment incentives, leading funds to flow into the real estate market rather than productive investment.
Park said, "For capital market reform to lead to tangible results going forward, it is necessary to ease tax imbalances between financial products and real estate to guide funds toward productive financial investment," adding, "An increase in the free float ratio and stronger protection of ordinary shareholders' rights should also be pursued."
He said the recently promoted Value-up Program and amendments to the Commercial Act and the Financial Investment Services and Capital Markets Act are having a positive impact on the market. He explained that 718 listed companies are participating in the Value-up Program, and that key performance indicators such as participating corporations' price-to-earnings ratios and price-to-book ratios (PBR) are relatively solid.
He also assessed that moves pursued through revisions to the Commercial Act and the Financial Investment Services and Capital Markets Act—such as expanding directors' duty of loyalty, mandating the retirement of treasury shares, improving dividend procedures, and strengthening sanctions against unfair transactions—are contributing positively to restoring market trust. However, he emphasized that for these institutional changes to yield real results, the effectiveness of tougher director accountability must be secured, including by invigorating shareholder derivative suits.
Han Jae-jun, a professor in the Department of Finance and Business at Inha University, also said in a presentation that day, "The core of productive finance is not simply flooding the system with money, but ensuring funds do not remain in real estate and collateralized lending and instead flow to innovative corporations and long-term investment."
Han evaluated that productive finance policies carried on since the Moon Jae-in administration achieved some results in digitalization and promoting competition, but had limits in changing the structure of industrial funding. He added, "Productive finance cannot be accomplished by expanding bank lending alone," and said, "The capital market must price investment risk, share losses, and supply long-term funds to growth corporations."
He added, "Rather than introducing new systems or merely expanding fund sizes, what matters is the actual flow of funds, the development of the exit market, shareholder protection, and building trust in market gatekeepers such as credit rating agencies," and "Ultimately, the success or failure of productive finance hinges on whether a trusted capital market is built."