SEOUL KOREA - An investment pool that will put hudreds of small-sized private pension funds together will be formed. The Financial Services Commission said this on November 26 as part of a plan to stimulate the stock market. If the pool, estimated at 68.5 trillion won, invests 20 percent of its fund to the domestic stock market, 13.7 trillion won will be newly injected into the market. In addition, the limit for the Korea Post to invest in the stock market will be adjusted upward to 20 percent from current 10 percent, which will raise the investment volume to 12 trillion won from 6 trillion won.

 

In addition, the limit for commercial banks to invest in the stock market will be increased to 100 percent of their capital adequacy ratio from current 60 percent. As for insurance companies, the standard to gauge the degree of risk of stocks they hold will be relaxed. Together with measures to expand the institutional investor-side demand, the financial regulator will introduce a Korean-version Dow Jones index tentatively called the KTOP 30. The daily upper and lower limit for individual stocks will be adjusted to 30 percent from current 15 percent.

 

But the latest deregulation package didn't include offers like tax cuts and exemptions that may stimulate the stock market. Lee Hyun-cheol, director responsible for the capital market with the Financial Services Commission, said, "We constantly negotiated with the Ministry of Strategy and Finance to include tax cuts in the package but couldn't do it this time. Except tax privileges almost all stimulus measures were included in the package that we can take."

 

 

Article provided by The Korea Economic Daily