South Korea’s Koo Dismisses ‘Kospi 8,000 Bubble’ Fears, Citing Innovation Push

Koo Yun-cheol, South Korea’s deputy prime minister and finance minister, dismissed concerns that the country’s capital markets are in a bubble, saying such worries surface when innovation efforts are lacking.

In a video posted May 30 on YouTube channel SamproTV, Koo brushed aside questions over whether the Kospi could lose the 8,000 level. He said the government would present structural reform measures and plans to revive potential growth in its economic growth strategy for the second half.

Addressing concerns that stock prices need to be backed by structural reforms to hold up on the downside, Koo said the government had already set out a policy direction that includes talent development, youth startups, artificial intelligence and a green transformation as part of a push toward a "hyper-innovative" economy.

He said the market would judge South Korea’s stock market based on those substantive efforts.

On tax revenue linked to strong semiconductor performance, Koo said higher-than-expected receipts were all but certain. Still, he was cautious on the size, saying it would only become clear after interim corporate tax prepayments are checked in August.

He also said excess tax revenue would be invested in a Korean-style sovereign wealth fund to create a long-term investment platform for future generations.

Koo also commented on fiscal tightening under President Yoon Suk Yeol’s administration. He said the previous administration had cut research and development spending, which reduced tax revenue and widened the fiscal deficit.

At a time of sweeping AI-led transformation, the government should spend boldly on projects with clear potential, he said, adding that next year’s national debt and deficit figures would show that.

Park Su-rim, Hankyung.com reporter paksr365@hankyung.com