SEOUL, Sept 12 (Askume) – South Korea’s market regulator on Thursday stressed the role of public pension funds in ensuring the success of ongoing capital market reforms, actively seeking foreign investment and promising to seek domestic opportunities.
“The responsible role of pension funds and asset management companies as long-term investors is crucial to expanding the investment base in the capital market,” said Lee Bok-hyun, director of the Financial Supervisory Service (FSS).
Lee cited market participants’ assessment that increased domestic investment by Japan’s public pension funds has contributed to the success of its market reforms.
In February this year, South Korea launched a ” Corporate Value Enhancement Plan ” modeled on Japan’s capital market reforms to boost the domestic stock market by encouraging listed companies to increase shareholder returns. It has since proposed a number of follow-up measures, including tax cuts, to strengthen the program.
Lee made the remarks at a forum jointly organized by the FSS, the National Pension Service (NPS) and the Korea Exchange.
“We will look for ways to use ‘value-added’ policies, including the new index being developed by the Korea Exchange, to improve the fund’s profitability,” NPS President Kim Tae-hyun said.
Other efforts already made by the NPS to enhance the value of public companies through outsourcing of investment and management functions will also continue, Kim said.
The Korea Exchange plans to introduce a new stock market index this month that will include listed companies that are working to increase their market capitalization to complement reform plans.
In recent years, NPS has been actively increasing investments in foreign assets in the hope of achieving higher returns and delaying the exhaustion of funds. Its funding is expected to be exhausted by 2056 due to the rapidly growing population.
As of the end of June, the world’s third-largest pension fund, NPS, had assets of 1,147 trillion won ($857.12 billion). The ratio of foreign stocks and domestic stocks it holds is 34.1% and 13.8%, respectively. (1 USD = 1,338.2000 Korean won)
