[Saturday Column] The Era of Buying Gangnam Apartments with Coins and US Stocks Must End

The Risk Level of Mass 'Account Immigration'

Decreasing Incentive to Develop South Korea

Deep-rooted Distrust and Aversion Toward the 'Domestic Market'

This Bull Market Brings a Turning Point

The Stock Market Is the Core of the Asset Market

Tax Reform Is the Key to Structural Uptrend

Han-shin Park, Deputy Editor of the Securities Department

'If you can't immigrate yourself, at least make sure your account does.'

This phrase, which I first heard last May when I took charge of the stock market beat, still lingers in my mind. Previously, I had little interest in investing in US stocks, so I had no particular thoughts about other people's 'account immigration.' In fact, I think I even felt a faint aversion toward blind faith in US stocks.

Once I started to take a closer look at the market, I realized how serious the situation was. On Telegram channels where investors seek information, meme images like these were everywhere. 'Bro, for the sake of your kids, just go inverse on the domestic market.' 'Still not giving up on the domestic market? Want another capital increase?' At that time, the KOSPI was still climbing toward the 2700~2800 mark, but it was easy to see that accumulated aversion and distrust toward the Korean stock market had reached their peak.

[Saturday Column] The Era of Buying Gangnam Apartments with Coins and US Stocks Must End. What’s even more concerning is that investors are now redefining their interests overseas, not in South Korea. Whether for the long term or short term, for those 'west-learning ants,' the success of US companies now matters more than that of Korean companies. This makes it more likely that they’ll become less sensitive to domestic corporate policies like corporate tax or the 'yellow envelope law.' They may even become indifferent to social issues that dampen economic vitality, such as the low birth rate. In terms of the market, investors' oversight toward companies could weaken, leading to more toxic zombie companies and a deterioration in market soundness.

Perhaps the reason why coined words like 'Hell Joseon,' which were popular about 10 years ago, are heard less frequently now is because alternatives like coins and overseas stocks have emerged. Instead of wasting time complaining about the country, just study coins or US stocks more and make money. In fact, I saw many people who, during the last presidential election, immersed themselves in US stock studies out of resignation. The idea that you have to immigrate with your family if you dislike living in Korea is now outdated. These days, just opening a US brokerage account gives you half the feel of immigrating. The net purchase amount of US stocks by individual domestic investors last year alone was 375 trillion won.

From this perspective, the recent 'bull run' in the domestic stock market is welcomed. Not just because rising stock prices are letting people make money and spend, but rather because I see a possibility that structural reappraisal in the domestic stock market can keep investors engaged. Is it stretching the analogy to say it’s like talented people returning from studying in America and contributing to our society after not settling abroad?

In reality, 'west-learning ants' are returning to the domestic market. While domestic investors net-bought US stocks at a monthly average of 4 to 5 trillion won from January to April this year, they switched to net-selling in May and June. Investor deposits, which are funds waiting to enter the domestic stock market, reached 68.9724 trillion won as of the end of last month—the highest since January 2022 (70.3447 trillion won). We don't know how long this will last, but for now, it’s meaningful that the outflow of interests has reversed.

Now, what matters is ensuring this development isn't just a fleeting cycle, but a structural uptrend. The black cat, white cat policy approach of the Jae-myung Lee government has become more important than ever. Amending the Commercial Act is uncharted territory. Even if the duty of loyalty for directors is extended from the company to shareholders, the amendment itself does not directly mandate companies to return profits to shareholders. Contrary to expectations, if companies are shaken by a flood of lawsuits, share prices may fall.

According to the seasoned insiders of Yeouido, there are actually high hopes for practical policies like separate taxation of dividend income. While the 'tax cut for the rich' narrative mattered in the opposition, now a broad-minded vision befitting the ruling party is needed. In the current setup, where major shareholders have 45% of their dividends taxed, it’s inevitable that even minority shareholders suffer from a drought of dividends. If the policy stance is to make large and ordinary shareholders equal, then reforming punitive taxation against major shareholders so that funds flow back to minorities is right in line with that direction.

Just a year ago, the domestic stock market was groaning under the Democratic Party of Korea's push for a financial investment income tax. Fortunately, the practical decision to fully abolish the tax recently laid the groundwork for the KOSPI's surge. Had the government pressed forward, trapped in ideology, capital flight would have accelerated, and the domestic market would have become a permanent subject of ridicule, never able to win back the 'west-learning ants.' This distorted asset market, where people use coins and US stocks to buy Gangnam apartments in Korea, must be changed during this golden opportunity.

Reporter Han-shin Park phs@hankyung.com