President dismisses geopolitical fears as exaggerated, sets sights on 'Korea premium'

President Lee Jae Myung gives a speech as other participants listen during a meeting on capital market reform, held under the slogan "A capital market strong in crisis and trusted by the people," at Cheong Wa Dae, Wednesday. Yonhap

President Lee Jae Myung hosted a meeting on capital market reforms, Wednesday, arguing that geopolitical fears stemming from the divided Korean Peninsula are exaggerated and have long suppressed the value of Seoul stocks, suggesting that fixing the problem could turn the chronic "Korea discount" into a "Korea premium."

“The geopolitical risk arising from the division of the Korean Peninsula is more exaggerated than people think and even politically exploited, becoming a recurring problem,” the president said during the meeting at Cheong Wa Dae, held under the slogan “A capital market strong in crisis and trusted by the people.”

While acknowledging that risks must be addressed, Lee sought to reassure markets by noting that South Korea's spending exceeds North Korea's by more than 1.4 times and that its economic power — the foundation of national defense — is "overwhelmingly ahead, to the point where it's hard to compare."

“I believe that, depending on what we do, the country doesn’t have to suffer from the ‘Korea discount.’ It is entirely possible to move beyond fair valuation and even achieve the ‘Korea premium,’” Lee said.

President Lee Jae Myung listens to a participant seated beside him during a meeting on capital market reform, held under the slogan "A capital market strong in crisis and trusted by the people," at Cheong Wa Dae, Wednesday. Yonhap

The president downplayed concerns over a geopolitical risk as he outlined factors behind the Korea discount, which refers to Korean firms being priced below their international peers.

They included the abusive exercise of control over management rights, often by conglomerates, a lack of market transparency and fairness, and the unclear and unpredictable direction of industrial and economic policy.

The president also reaffirmed a stern policy against unfair and illicit practices, unveiled last year as “One strike, you’re out,” and expressed hope that the reforms would "build a society where growth is steady and benefits are shared broadly."

“Through this, the foundation for continued growth is further strengthened, creating a virtuous cycle in the economy," he added.

The meeting took place in an open discussion format, centering on four policy directions to improve the fundamentals of the equity market — establishing market order and restoring trust, enhancing shareholder value, fostering market innovation, and expanding investment accessibility.

The discussion also addressed responsive measures against the volatility prompted by the ongoing Iran conflict, which exposed the domestic stock market’s vulnerability to external shocks, despite the benchmark KOSPI having reached milestones of 5,000 and 6,000 points earlier this year.

The gathering was attended by more than 40 guests, including executives from Mirae Asset Securities, KB Securities and the Seoul offices of Goldman Sachs and Morgan Stanley, as well as influential retail investors and promising startup CEOs.

From the government and regulatory side, attendees included Financial Services Commission (FSC) Chairman Lee Eog-weon, Financial Supervisory Service Gov. Lee Chan-jin, and Korea Exchange (KRX) Chairman and CEO Jeong Eun-bo.

Top Cheong Wa Dae officials were also present, including Kang Hoon-sik, presidential chief of staff; Kim Yong-beom, chief of staff for policy; Ha Joon-kyung, senior secretary for economic growth; and Bong Wook, senior secretary for civil affairs.

The meeting followed several other efforts at dialogue with industry insiders after Lee took office last year, aiming to revitalize the stock market and redirect investments heavily concentrated in real estate.

For instance, Lee visited the Market Oversight Commission at KRX on June 11, just a week after his term began, and later invited top analysts from leading securities firms to the presidential office on Sept. 18.

Following the president’s introductory speech, the FSC chairman presented the commission’s plan as the nation’s top financial regulatory body, structured around the four aforementioned policy directions.

The plan calls for delisting insolvent companies that are so unprofitable they cannot even cover their interest payments.

It also focuses on tightening regulations on duplicate listings, a business practice of a parent company spinning off a high-performing subsidiary to raise capital, often criticized for diluting the parent company’s shareholder value.

The plan additionally addresses measures to boost the secondary bourse Kosdaq and the lower-tier KONEX, subsequently providing funding to innovative companies at various stages of growth, and introducing long-term investment products and new financial instruments designed to directly benefit the public.