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| Financial Services Commission (FSC) Vice Chairman Kim So-young speaks during a foreign press conference held at the Korea Press Center in central Seoul, Friday. Courtesy of FSC |
By Anna J. Park
The Financial Services Commission (FSC), Korea's top financial regulator, stressed that the Yoon administration is aiming to facilitate a fairer and more globally-adaptive capital market system so as to create a "virtuous circle" for both local and foreign investors.
During Friday's press conference held for foreign press media in Seoul, the financial regulator's Vice Chairman Kim So-young briefed on the government's recent string of measures aimed at advancing local capital markets. This included the introduction of a mandatory bid rule in M&As, heightened protection for minority shareholders in stock investment, such as company split-offs, the abolishment of the foreign investor registration system, as well as dividend payment system change.
Reiterating the measures that were either implemented late last year, or are to be implemented within the next two years, the Vice Chairman said the government hopes to dispel Korean stocks' undervaluation ― or the so-called "Korea discount."
"Regardless of local companies' growth potential, Korean stock markets' annual return rate during the past 10 years has been much lower than those of global peers. With various factors contributing to the situation, we see areas which need much improvement, including lack of shareholder return policy and an investment environment that does not fit the global standard," he said.
He emphasized that the globalization of the local capital market structure is vital for both local and foreign investors.
"The government's latest efforts to bring the local capital market up to the global standards are not only significant for retail investors but also for foreign investors, as the measures could yield a virtuous circle of economic growth," Kim said.
The vice chairman hopes the government's reforms will make the capital market fairer and more open to the world which should then result in local bonds' inclusion in the MSCI Developed Markets Index. Yet, he added that being included in the index is not the sole and ultimate reason behind the government's drive for advancing local capital markets.
FTSE Russell, a global index provider, is slated to announce whether to include Korea in its World Government Bond Index (WGBI) in its semi-annual report due next month.
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