SEOUL: President Yoon Suk Yeol called for bipartisan cooperation to abolish the proposed financial investment income tax and announced preparations to lift the temporary ban on short selling by March 2025 to boost the stock market.
According to Yonhap News Agency, during a recent Cabinet meeting, President Yoon highlighted the need for collaboration between the ruling People Power Party and the main opposition Democratic Party to eliminate the financial investment income tax. This move is aimed at reducing market instability and fostering the growth of the financial market. The tax, initially meant to be implemented last year, has been postponed to January 2025. It proposes a 20 percent tax on capital gains exceeding 50 million won (approximately US$38,000) from stock investments, and a 25 percent tax on gains over 300 million won.
President Yoon expressed optimism about the potential benefits of scrapping the tax, emphasizing the creation of a “virtuous cycle” where companies can enhance their value, and i
ndividual investors can enjoy greater profits and opportunities to build assets.
Additionally, Yoon welcomed the decision by FTSE Russell to include South Korea in the World Government Bond Index (WGBI) in November 2025. He anticipates this inclusion will attract up to 75 trillion won in foreign investments, helping to stabilize interest rates and the value of the won, and reduce borrowing costs for the government and companies. Being listed in this global bond investment index, which is worth $2.5 trillion, is expected to significantly expand and deepen South Korea’s capital markets.
To further stimulate the stock market, President Yoon has instructed relevant agencies to prepare for the lifting of the temporary ban on short selling. This ban, initially imposed in November 2023 following allegations of naked short selling against several global investment banks, was set to expire in July 2024 but has now been extended to March 2025.
The revised Capital Market Act, discussed during the Cabinet meeting, wil
l enable the government to monitor illegal short-selling practices through an electronic system and will strengthen penalties for unfair trading practices. This is expected to ensure a level playing field for both individual and institutional investors.
Furthermore, Yoon reiterated his commitment to implementing “corporate value-up” policies. These policies are designed to invigorate the capital market by providing incentives for companies that adopt shareholder-friendly policies, such as increasing dividends or executing buyback programs, to address the “Korea Discount.”