South Korea's Lee Orders Senior Task Force to Normalize Stock Market

President Lee Jae Myung told a capital market policy meeting at the Korea Exchange on the 13th that the market decline has gone too deep, but he thinks it may find its way back to where it belongs. He said helping it get there is the job of government authorities. In his closing remarks, Lee pledged a bigger push than before to normalize the stock and capital markets and ordered a task force of senior officials from relevant ministries to lead the work.

Lee said he would personally oversee institutional improvements and follow-up measures, and he demanded fast execution. He promised to bring the issues into the open, develop reasonable solutions and put them into action, vowing to see the process through as quickly as possible.

He listed four causes of the domestic stock market’s undervaluation: uncertainty over industrial and economic policy, problems with corporate governance and management transparency, distrust from unfair trading, and geopolitical risks. Lee said geopolitical risks on the Korean Peninsula are unlikely to be a major constraint unless they are exploited politically, and he judged that geopolitical risks and policy uncertainty have eased. Market transparency and corporate management, he said, remain unresolved challenges.

Corporate governance and management practices are the hardest problem, Lee said, citing doubts over whether shareholders are adequately respected. He noted financial authorities prevented recent attempts at duplicate listings, but said the fact that such attempts are still being made is concerning. Shareholder dividends and returns also look unsatisfactory, he added, calling governance and management reform likely among the National Assembly’s most important legislative tasks despite strong resistance and conflicting interests. He said his government will work to carry out all four tasks well.

On market confidence, Lee credited strong enforcement and penalties with recovering some trust on transparency, but said the situation is not perfect. He said authorities may need somewhat more power and staffing, and called market transparency an ongoing task. He also said South Korea’s global standing is changing fast, yet a few areas remain stalled and below international standards and benchmarks, calling it his government’s top priority to overcome that abnormality.