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President Lee Jae Myung speaks about revitalizing the capital market at a capital market policy meeting held in Yeouido, Seoul, on Nov. 13. /Yonhap News Agency

President Lee Jae Myung said on Nov. 13 that the government would crack down on unfair trading practices, including stock price manipulation, and accelerate corporate governance improvements and reforms to the KOSDAQ market to address the chronic undervaluation of South Korean stocks.

Speaking at a capital market policy meeting held at the Korea Exchange (KRX) that morning, Lee said, "Normalizing the capital market is a firm policy direction and commitment of our government."

Lee went on to say, "Our stock market has recently undergone a sharp correction. Our government's commitment to capital market reform and its policies have once again been put to the test." Nevertheless, he added, "I believe the fundamentals of the Korean economy are quite strong."

"It is highly unreasonable and abnormal for the same stock to be undervalued simply because it belongs to a South Korean company or is listed on the South Korean stock market," Lee said.

Lee identified restoring market confidence as a key priority in normalizing the capital market. "Trust is the most important value in the capital market," he said, pointing out that stock price manipulation, duplicate listings and abuses of management control by controlling shareholders had fueled investor distrust.

Lee also reaffirmed the government's commitment to taking a tough stance against unfair trading practices.

"We are responding strictly to stock price manipulation and other unfair practices across the government," he said. "We have increased enforcement personnel and separately instructed the Serious Crimes Investigation Agency to crack down on unfair practices in the financial and capital markets."

On reforms to the mandatory tender offer system, Lee emphasized the need to strike a balance between protecting minority shareholders and facilitating corporate mergers and acquisitions (M&A). His remarks reflected an intention to give minority shareholders a fair opportunity while seeking market feedback to ensure the system does not hinder legitimate M&A activity.

Regarding the KOSDAQ market, Lee called for the swift removal of financially troubled and underperforming companies while stressing the need to protect businesses with technological capabilities and growth potential.

His plan is to review the overall framework for listings, delistings and evaluations, transforming the KOSDAQ into a market that innovative companies and investors can trust.

"The government's job is to establish fair and transparent market rules and ensure that those rules apply to everyone without exception," Lee said. "We will create an environment in which companies are valued in line with their actual worth."

                                                                                                         Park Young-hoon