Presidential candidates' market pledges: Lee focuses governance, Kim on deregulation

The KOSPI index is displayed on a monitoring screen at a Hana Bank dealing room, Seoul, Wednesday. Yonhap

Democratic Party of Korea presidential candidate Lee Jae-myung and People Power Party candidate Kim Moon-soo have both pledged to boost the domestic stock market by addressing the so-called Korea discount, in a bid to win the support of the country’s 14 million retail investors in the June 3 presidential election.

However, according to financial industry officials and politicians, Wednesday, their approaches widely differ in detail — Lee emphasizes restoring trust through improved corporate governance and stronger shareholder rights, while Kim focuses on revitalizing investment by easing regulations and overhauling the tax system.

The two main candidates also show clear differences in their stances on the amendment to the Commercial Act, aimed at expanding corporate directors' fiduciary duties beyond the company to include shareholders — a topic that has recently drawn significant attention for its potential impact on the stock market.

Lee expressed his intention to reintroduce the amendment, which was previously vetoed by then-acting President Han Duck-soo last month after being passed by the National Assembly. Kim, meanwhile, voiced his support for the government’s revised proposal.

According to the National Election Commission (NEC), Lee included his plan to boost the domestic stock market in a list of 10 key campaign pledges he recently submitted.

Lee pledged to reorganize the stock market based on the characteristics of listed companies and to bolster shareholder returns in a bid to improve supply-demand conditions and expand liquidity in the market.

He also vowed to reform institutional frameworks to attract more foreign investment and to take active steps toward the country’s inclusion in the Developed Markets Index by global index provider Morgan Stanley Capital International.

Democratic Party of Korea presidential candidate Lee Jae-myung greets supporters before delivering a speech during a campaign rally in Busanjin District, Busan, Wednesday. Joint Press Corps

In addition, he promised to take a firm stance against unfair practices, including stock and market manipulation. His plan includes implementing a "one-strike-out" policy that would bar anyone involved in such activities from participating in the market.

He also aims to bolster surveillance of insider trading and other unfair activities using non-public information, while enhancing measures to recover profits gained from short-term speculation.

Emphasizing the transparency of corporate governance as a key component of his campaign agenda, he expressed his willingness to reintroduce the amendment to the Commercial Act.

Other measures to enhance corporate governance oversight include plans to activate the cumulative voting system, which would enable the appointment of directors representing minority shareholders.

Furthermore, Lee pledged to institutionalize the mandatory cancellation of treasury stocks by listed companies, ensuring that these shares are returned to shareholders as a benefit.

In a Facebook post last month, Lee expressed confidence that the implementation of these initiatives would "pave the way for the long-term goal of doubling the nation's benchmark KOSPI index to surpass 5,000 points."

Kim, on the other hand, focused on stimulating corporate investment by easing investment regulations, rather than pursuing structural reforms within the stock market.

His proposal includes aligning domestic regulations with global standards and reducing corporate tax rates, alongside lowering the top inheritance tax rate, as part of a broader tax reform initiative aimed at fostering investment.

People Power Party presidential candidate Kim Moon-soo raises his hands during a campaign rally in Jinju, South Gyeongsang Province, Wednesday. Joint Press Corps

In addition, Kim committed to supporting middle-class wealth accumulation by offering tax incentives for long-term stock and fund investors.

For dividend income, he suggested exempting the first 50 million won ($35,000) from taxes and applying a 20 percent separate tax rate on income above this threshold, to encourage shareholder returns.

While he had previously promised to eliminate dividend income taxes during the party primary, he revised this stance in the campaign pledges submitted to the NEC.

"I will create opportunities for the public to grow their assets through financial markets by expanding dividend income, which serves as a third source of income," he said.

On April 26, when outlining his pledge to advance the domestic capital market, he also vowed to personally engage in investor relations activities targeting foreign investors if elected.

"When the president travels abroad, it is the perfect time to promote the K-capital market," he said.

Regarding the Commercial Act amendment, he supported the government's stance of promoting an amendment to the Capital Markets Act as an alternative.

He also expressed his intention to strengthen penalties for economic crimes, such as stock manipulation, by raising the maximum prison sentence to life imprisonment, and to introduce a system of punitive damages.

Lee Jun-seok of the minor New Reform Party focused on enhancing market transparency and protecting minority shareholders through legal and institutional reforms.

Rather than prioritizing economic pledges, he emphasized administrative reform through the restructuring of government ministries as his top priority.