Korea’s stock market started as a political effort, however after the mid 1970s, in relatively short term, it has grown rapidly and settled as a main financial market. Yet, expansion of number of stock investors has been weak, lack of dispersed stock ownership, and there is strong investment climate that investors are willing to earn profits on short-term transaction. Under this kind of structure, supply and demand of funds are imbalanced and fluctuation of share price becomes heightened; it is difficult to expect the development of stock market. It is important to set investment climate for investors who have stable and long-term perspective with potential that will actively participate in the stock market for longer period.
The reason why Korea’s institutional investors are passive in the stock market is due to the low interest rate which is regulated by the government, excessive demand of funds, high inflation rates, and uncertainty towards the future savings. This short-term phenomenon showed that financial institutions that primarily contains institutional investors cannot invest in long-term financial assets such as stocks. Moreover, lack of outstanding stocks that investors could compose their asset portfolios, lack of freedom to manage the asset, undeveloped information delivery system such as corporate disclosure, credit evaluation, etc, and lack of expertise and conservative management can also affect the investment climate.
In order to induce institutional investors to participate into the stock market, the market must guarantee the freedom of investors to make their own decision. Also, it must enlarge the investor’s range so that many stock investors can participate in the market more equally to increase the scale of capital trade, keep high liquidity, and increase the level of financial intermediary function effectively. In the short-term, it is desirable to expand income from dividends to institutions that are targeted for “Exclusion from gross income.” Furthermore, relieve the regulation on investment of stocks and bonds and expand credit information system to limit government intervention in financial management; at the same time, based on the information about the institution, allow investors to participate in stock trading at their own free will at low cost. Also, encouragement of unlisted market or training experts will contribute to the revitalization of stock market.
증권시장의 발달과 기관투자가의 역할
서울 : 한국개발연구원
|Series Title; No||연구보고 / 86-09|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Economy < Financial Policy|
|Holding||KDI; KDI School|