[fn Editorial] Amateur Policies Causing Stock Market Confusion Must Not Be Repeated

The KOSPI index's shock from 'Black Friday' on the 1st, when it plummeted by 3.88%, has not ended. It is not time to consider last week's stock plunge as a mere temporary adjustment. On the 4th, the KOSPI index rose by 28.34p, appearing stable, but there is a high possibility of a roller-coaster market in the future.

The domestic stock market showed the highest growth rate in the world after the new government's inauguration, but the foundation remains unstable. Factors such as the government's tax reform plan that could shake the stock market are still lurking. The stock market will continue to explore its direction amid strong caution for the time being.

The possibility of sudden changes in the stock market remains like a ticking time bomb. The unstable market sentiment can be seen as having been predicted with the inauguration of the new government. The Lee Jae-myung government presented rosy forecasts such as the possibility of achieving a KOSPI index of 5000. However, setting the stock index target too high and boosting the mood is nothing but a dangerous encouragement to invest. The fact that the once-booming stock market was shaken by just one policy change, such as the tax reform plan, is evident.

What is more concerning is that in a rising market where fundamentals are not solid, the ones who suffer from sudden market changes are the individual investors. As the uncertainty of the stock market increases and fluctuations continue, individual investors who lack information and capital strength are inevitably at a disadvantage.

It is believed that the excessive expectations of investors following the new government's inauguration have dominated the market. If companies do not strengthen their competitiveness and secure substantial growth engines, abundant liquidity could drain away like an ebb tide at any time. Efforts must be made to develop a healthy market based on corporate performance rather than unfounded expectations.

Additionally, institutional stability and transparency to raise market and corporate value are urgently needed. The government's plan to lower the major shareholder standard from 5 billion won to 1 billion won is causing policy confusion, with some political circles moving to reconsider it. Within the ruling Democratic Party, disagreements over the major shareholder standard are exacerbating market anxiety. Although the new party leader, Jeong Cheong-rae, has issued a gag order to manage the situation, the situation is still unclear.

The ruling party's hasty message to the market without sufficient review is also a problem that can be criticized. Uncertain attitudes undermine market credibility. Sufficient communication and review are essential to introduce core systems such as the major shareholder standard or capital gains tax. Policies that do not go through such processes will repeatedly cause confusion and adverse effects.

Ultimately, the government should take this week's volatile situation as a lesson and strive to improve the transparency and predictability of the stock market through institutional reform. Instead of being caught up in short-term expectations, programs that can raise the value of the stock market in the long term should be prepared to reduce market anxiety.