Who can lift Seoul’s stock market as foreign investors dump $30 billion over nine months?

Employees monitor stock and currency markets at the Hana Bank headquarters dealing room in Jung District, Seoul, Tuesday. Yonhap

Foreign investors have offloaded more than 40 trillion won ($30 billion) worth of Korean stocks over the past nine months, underscoring growing concerns over political uncertainty and U.S.-driven tariff risks.

As both major presidential candidates pledge to bolster the stock market and appeal to the nation’s 14 million retail investors, analysts warn that only long-term structural reform can prevent those promises from becoming empty slogans.

According to data from the Financial Supervisory Service on Sunday, non-Korean investors sold a net 13.6 trillion won in Seoul stocks in April, the largest monthly sell-off on record and surpassing the previous high of 13.5 trillion won in March 2020.

It marked the ninth straight month of net selling, with cumulative outflows over the period totaling 40.08 trillion won.

Democratic Party presidential candidate Lee Jae-myung calls for voter support during a campaign rally at Rodeo Street in Uijeongbu, Gyeonggi Province, Tuesday. Yonhap

Lee Jae-myung's pledges

Lee Jae-myung of the Democratic Party of Korea, who has repeatedly referred to himself as a “retail investor,” has made capital market reform a key part of his campaign.

In his policy platform, he claims that, with proper reforms, the KOSPI index could reach 5,000 points within five years.

Lee’s proposals include revising the Commercial Act to strengthen shareholder rights and address governance issues. He pledged to eliminate abusive practices by controlling shareholders, such as tunneling for private gain and price manipulation, while improving dividend payouts and fair market order.

He also suggested that listed firms with extremely low price-to-book ratios (PBR) of 0.1–0.2 should be liquidated quickly to unlock shareholder value.

People Power Party presidential candidate Kim Moon-soo calls for voter support during a campaign rally at Seoul Station Plaza, Monday. Yonhap

Kim Moon-soo's strategy

In contrast, Kim Moon-soo of the ruling People Power Party has aligned himself with the Yoon Suk Yeol administration’s push for capital market liberalization and tax incentives.

His platform includes expanded tax breaks for long-term stockholders and fund investors, as well as separate taxation of dividend income.

Kim also proposed increasing annual contributions and tax-free limits for Individual Savings Accounts to 40 million won and 10 million won, respectively. These measures mirror policies proposed during the Yoon administration that were blocked in the National Assembly.

He added that presidential overseas visits should be used as opportunities to promote Korea’s capital market, pledging to personally lead investor relations campaigns to attract global funds.

On corporate law reform, he expressed support for amending the Capital Markets Act instead of revising the Commercial Act.

Electronic boards show the KOSPI, the won-dollar exchange rate and other market indicators at Hana Bank’s dealing room in Jung District, Seoul, Friday. Yonhap

Which candidate?

Market sentiment appears to lean toward Lee’s proposals for their more aggressive approach to structural reform. “Among all the candidates, Lee has the deepest understanding of the equity market,” said a securities industry source who requested anonymity.

“His emphasis on liquidating undervalued firms and attracting venture capital could help bring in new investments if implemented properly.”

Indeed, 17 labor unions representing Korea’s securities sector publicly declared support for Lee on Friday.

However, some in the business community view Kim’s proposals as more stable and predictable.

“Revising the Commercial Act could trigger a wave of lawsuits and increase uncertainty, weakening corporate activity,” said one business federation official. “Companies have already begun responding to the Yoon administration’s value-up program, and they want continuity.”

Analysts, however, caution that campaign pledges alone are unlikely to lift the market out of its long-running stagnation. Despite repeated political promises like “KOSPI 3000” or “KOSPI 5000,” the index has remained range-bound for years.

“Whenever pressing issues arise, capital market reform is pushed to the sidelines,” said Seo Ji-yong, a business professor at Sangmyung University. “With so many challenges ahead, including governance reform, tax overhaul and short-selling rules, the next administration must treat capital market development as a core economic policy and tackle it with long-term vision.”

This article from the Hankook Ilbo, the sister publication of The Korea Times, is translated by a generative AI and edited by The Korea Times.