Market rout reignites concerns over South Korea investment tax
By Cynthia Kim
SEOUL, Aug 7 (Reuters) -A stock market rout that wiped $140 billion off South Korea's KOSPI index on Monday may accelerate the government's efforts to scrap a proposed tax on stock trading income amid concerns of a market dominated by retail investors.
President Yoon Suk Yeol has been trying to secure approval from the main opposition party for his plan to eliminate the tax, which would impose a levy of at least 20% on trading income from stocks and bonds if annual capital gains exceed 50 million won ($36,325) from 2025.
"Any new tax at this point would be absolutely absurd," said Oh Jeong-min, 42, a retail investor who lost nearly 10% of his portfolio in domestic and U.S. shares on Monday.
"We once again saw how vulnerable the Korean market was when the U.S. sneezes," said Oh, referring to how a rise in the U.S. unemployment rate to a near three-year high spooked markets.
Financial regulators worry the proposed capital gains tax could deter many of the 14 million local retail investors from the $1.7 trillion domestic stock market. There has been a trend of local investors favoring global stocks such as Nvidia NVDA.O and Tesla Inc TLSA.O over domestic investments since the pandemic.
This week, a blog run by opposition Democratic Party lawmaker Jin Sung-joon, who supports the tax bill, was flooded with critical comments from retail investors, who account for around two-thirds of domestic trade.
"(Monday's) crash revealed the painfully weak supply and demand situation of the domestic markets. The financial investment tax will put a nail in the coffin, is this how you want to ruin the market?" one post read.
Democratic party lawmakers contend that the proposed tax is fair, affecting only about 1% of the 14 million retail investors.
Jin at a May 10 policy meeting had said that such a tax has been successfully introduced in Germany and Japan and helped stabilise their financial investment systems.
However, following the KOSPI's 8.8% slump on Monday, the Democratic Party cancelled a public debate on the tax scheduled for Wednesday, according to the office of lawmaker Lim Kwang-hyun, who also backs the tax.
Yoon's office on Wednesday issued a statement once again urging parliament to accelerate the discussion to abolish the bill as "it is undesirable for the bill to hang over uncertainties when the majority of the public agrees that the tax should be scrapped."
Han Dong-hoon, leader of the ruling People Power Party, said in televised remarks on Tuesday that sticking to the tax plan would be like "creating a perfect storm and walking into it ourselves".
The tax is slated to take effect from 2025 unless the opposition Democratic Party bloc, which holds a majority in parliament, revokes or amends the bill.
"Given the meltdown we saw, the opposition may agree to delay the introduction of the tax," said Kevin Choi, head of ANDA Asset Management in Seoul.
"They should acknowledge that stock investment is a channel to boost people's wealth at a time when the domestic stock market has been underperforming compared to its global peers."
The KOSPI .KS11 has lost 3.4% so far this year, underperforming the S&P 500 .SPX and Nikkei .N225, which are up 10% and 5%, respectively.
Reporting by Cynthia Kim; Editing by Ed Davies and Jacqueline Wong
免責聲明: XM Group提供線上交易平台的登入和執行服務，允許個人查看和/或使用網站所提供的內容，但不進行任何更改或擴展其服務和訪問權限，並受以下條款與條例約束：（i）條款與條例；（ii）風險提示；（iii）完全免責聲明。網站內部所提供的所有資訊，僅限於一般資訊用途。請注意，我們所有的線上交易平台內容並不構成，也不被視為進入金融市場交易的邀約或邀請 。金融市場交易會對您的投資帶來重大風險。
所有缐上交易平台所發佈的資料，僅適用於教育/資訊類用途，不包含也不應被視爲適用於金融、投資稅或交易相關諮詢和建議，或是交易價格紀錄，或是任何金融商品或非應邀途徑的金融相關優惠的交易邀約或邀請。
本網站的所有XM和第三方所提供的内容，包括意見、新聞、研究、分析、價格其他資訊和第三方網站鏈接，皆爲‘按原狀’，並作爲一般市場評論所提供，而非投資建議。請理解和接受，所有被歸類為投資研究範圍的相關内容，並非爲了促進投資研究獨立性，而根據法律要求所編寫，而是被視爲符合營銷傳播相關法律與法規所編寫的内容。請確保您已詳讀並完全理解我們的非獨立投資研究提示和風險提示資訊，相關詳情請點擊 這裡查看。
