President Lee Jae-myung on the 25th (local time) attended the "Korea Investment Summit," an IR event to explain investments in Korea, at the New York Stock Exchange and urged Wall Street heavyweights to invest in Korea. Lee pointed to geopolitical risk on the Korean Peninsula as a factor behind the undervaluation of Korea's stock market and said the North Korean nuclear risk will definitely be resolved, so invest in Korea. He especially saw the North Korea issue as driven more by political causes than military tensions and said the new administration's conciliatory policy toward the North can reliably ease tensions.
Visiting the United States to attend the U.N. General Assembly, Lee took part that morning in the "Korea Investment Summit" held at the New York Stock Exchange. After chatting with New York Stock Exchange officials, he also joined the "ring the bell" ceremony to strike the bell installed at the exchange.
The event drew leading representatives of Wall Street investment banks and asset managers, including Citi Group Chair Jane Fraser, Goldman Sachs President Marc Nachmann, J.P. Morgan Asset Management CEO Mary Erdoes, and MSCI Chair Henry Fernandez. From Korea, the economic and financial policy chiefs attended, including Deputy Prime Minister and Minister of Economy and Finance Koo Yun-cheol, Financial Services Commission Chair Lee Eok-won, and Financial Supervisory Service Governor Lee Chan-jin.
In his opening remarks at the investment summit, Lee said, "Korea's stock market keeps setting record highs," adding, "But Korea's stock market still has a PBR below 1 and a low PER. Individual capabilities of Korean companies are truly worthy of high marks, but share prices are low, and there are several reasons for that." He went on to cite as barriers to foreign investment the following: ▲ geopolitical risk on the Korean Peninsula ▲ opaque corporate governance ▲ market unfairness such as stock manipulation, and said he will definitely fix these undervaluation factors.
Lee devoted considerable time to pledging improvements in geopolitical risk on the Korean Peninsula. He saw it as an issue to be addressed politically rather than as military tension. Lee said, "Even excluding U.S. Forces Korea, Korea's military power ranks fifth in the world, and Korea's annual defense spending amounts to 1.5 times North Korea's yearly gross domestic product (GDP)." His point was that, in terms of defense and military strength, North Korea is no match for Korea, so the persistence of geopolitical risk on the peninsula is a political problem.
Lee said, "Taiwan is also under threat from China, but it is not undervalued (in the stock market) like Korea," adding, "Our administration intends to definitively resolve this risk."
Lee reiterated the "E.N.D. Initiative" he unveiled at the U.N. General Assembly. It is a new North Korea strategy to ultimately achieve denuclearization of the North through the stages of Exchange, Normalization, and Denuclearization. Lee said, "North Korea appears to have already secured sufficient nuclear weapons for regime survival," adding, "For ICBMs capable of bombing the United States, only the final step, the atmospheric reentry technology, remains."
He said, "If this is left unaddressed, North Korea will produce 15 to 20 nuclear bombs every year and could eventually export them to other countries," adding, "Even stopping that alone can yield considerable security benefits, so in the short term we should halt further nuclear weapons development and ICBM development, in the medium term reduce nuclear weapons, and in the long term pursue denuclearization." He also said he conveyed this idea to President Donald Trump.
Lee also pledged a strict response to stock manipulation and improvements in corporate governance through additional amendments to the Commercial Act. Lee said, "Through tax reform, we will enable more dividends, and a third amendment to the Commercial Act is underway to prevent treasury shares from being used to defend management control," adding, "There is some resistance, but it will be implemented."
Lee also pledged to swiftly remove hurdles that overseas investors feel in Korea's stock market. In his opening remarks, after noting that Korea's stock market has not been included in the MSCI index, he said, "We will promptly improve the foreign exchange transaction market system, the key obstacle to MSCI index inclusion," adding, "We are also drawing up a plan to virtually eliminate the time limits on foreign exchange transactions."